Oil-price slide adds to trials of Kentucky coal miners
Louisville, Ky. — The golden glow that lit a fire under Kentucky's coal industry just 18 months ago has been snuffed out, and the mood of industry leaders has turned black. ''No question about it, we're in a depression,'' says one-time miner Willard Stanley, now commissioner of the Kentucky Department of Mines and Minerals.
The nation's leading coal-producing state was revving up production for two promising avenues of growth - synthetic fuels and the overseas market. Rising oil prices during the '70s had led to greatly increased demand for coal. In both cases, however, worldwide recession and plummeting oil prices have put a damper on coal development here.
Plans to build three major coal-to-oil plants in Kentucky have been shelved in recent months, because sponsors have been unable to attract financing amidst speculation that oil prices will continue to fall. The development of a commercial synthetic-fuels industry would have opened a new market for western Kentucky oil, which is less competitive because of its high sulphur content.
Exports also have failed to grow at the anticipated rate, although state officials and industry representatives have been actively trying to sell more Kentucky coal abroad. In addition, tougher competition from other coal-exporting nations (primarily South Africa) is having a negative effect.
Despite the gloomy reports, some industry observers have a more positive outlook for the long term. And several point out that times have been even bleaker.
''I've been in this business for 42 years and I've seen it worse than this,'' says Everett Brown, whose industry association represents small- and medium-size coal producers in Pike County. ''I remember in 1946 you couldn't even give coal away.''
Douglas Sumner, a coal specialist with the accounting firm of Peat Marwick Mitchell & Co., also said the industry is depressed and the spot market for coal is''virtually dried up.'' But the current slump and resultant ''shakeout'' could produce a ''more vibrant coal industry.''
''The large companies are still in a good position, because of their capital base, and some of the smaller operators have just idled their facilities for the time being,'' Mr. Sumner says. ''I'm still very much an optimist for when the economy fully recovers.''
When the economy gets back on its feet, it will need such an abundant and reliable fuel, experts say. And Kentucky has 20 to 40 percent more in coal reserves than previously thought, according to a new study by the Kentucky Geological Survey.
After mining a record 157.6 million tons of coal in 1981, state production slumped to 146.6 million in 1982, according to the US Department of Energy. This marked the lowest yield since 1979.
Not surprisingly, unemployment in Kentucky's bituminous-coal-mining industry - which was in the single digits a year ago - stood at 30.2 percent in December, according to state figures.
Unemployment reported in Letcher County, which is heavily dependent on coal mining, currently stands at an alarming 37.4 percent. But even the official jobless figures are misleading, coal-industry observers say. Many miners listed as employed are working only partial weeks, they say, because companies are trying to maintain operations without adding to existing large stockpiles.
One state official suggests that some unemployed miners may be faring better than their counterparts whose shifts have been curtailed.
The miner ''who's just working two days a week is worse off than the unemployed fellow,'' the official said. ''That's because he doesn't qualify for unemployment benefits, and his creditors won't give him a break because they say he's got a job.''
State government has also suffered from the industry's decline. The state collected only $105.2 million from the Kentucky coal severance tax last year - down 12 percent from 1981. December's coal-tax receipts were off more than 24 percent from those of a year earlier.
Though there are signs of a pickup in the national economy, coal historically lags behind the business cycle, says Tom Duncan, president of the Kentucky Coal Association. The full impact of the national recession was felt later in coalfields than in most other industries, and the recovery will show the same pattern, he says.