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Economy pinches coal yield, budget
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SOUTH CHARLESTON -- Experts agreed Thursday that the global economic downturn and decreased demand for coal will hurt the state budget for the next several years.
Slumping coal production would cost the state millions of dollars in coal severance taxes. Mark Muchow, deputy secretary of the state's Department of Revenue, said the severance taxes associated with the production of natural resources contributes about $700 million to the state budget.
Energy experts met Thursday morning at the Marshall University Graduate College in South Charleston for the annual Associated Press Legislative Lookahead. The experts discussed the effect of the global financial crisis on West Virginia's economy, the effect of coal on the environment and alternative, renewable energy resources.
Muchow reported that the tonnage of coal produced in the state will not, at least for the next three years, reach levels seen in the late 1990s.
In the 2008 fiscal year, which ended June 30, Muchow said more than 160 million tons of coal were produced, and an estimated 150 to 155 million tons are expected in the current budget year. Energy experts expect coal production to continue to dip until 2011.
"We hope to stay between 150 and 160 million tons (produced), because that's what the state needs," said Bill Raney, president of the West Virginia Coal Association.
While prices are currently at $75 dollars a ton for coal, Muchow expects prices will decrease to $50 in the next few years.
Raney attributed the lower coal prices to a lack of global demand for steel, which uses coal for its production. When steel demand is down, Raney said, coal production decreases.
"The world-wide community is not using steel," Raney said. "We see barges being canceled, trains being canceled."
With lowered coal expectations, Don Garvin Jr. with the West Virginia Environmental Council said now is the time for the state to focus on creating alternative energy industries, such as wind and solar power. Garvin said the state knows the risks associated with natural resource production yet has not made a sufficient effort to create a greener West Virginia.
"The environmental risks aren't much different than what they were in the '70s and '80s during the last drilling boom," Garvin said. "We still have issues we haven't settled with the coal industry."
Some of the council's issues include mountaintop removal and the general pollution associated with the mining and burning of coal. Garvin added that there are a number of options available, including federal grants, to grow the state's efforts for clean renewable energy.
Following the forum on energy, Gov. Joe Manchin said he will release more details on his "alternative renewable portfolio" during his State of the State address on Feb. 11. Manchin said he hopes the state will lessen its dependency on coal and work to find viable, cost-efficient forms of renewable resources.
