Coal Demand, Market Forces, and US Coal Mine Closures

66 Pages Posted: 18 Jun 2018

See all articles by Brett Jordan

Brett Jordan

University of Alaska

Ian Lange

University of Stirling - Department of Economics

Joshua Linn

Resources for the Future

Date Written: April 24, 2018

Abstract

Economic transitions have the potential to displace workers and cause social unrest. Coal mine closures in the eastern United States due to the changing electricity system and the resulting employment losses in rural areas have become salient issues for all levels of government. Previous research has not distinguished among the potential causes of recent mine closures, such as rising production costs and decreasing coal demand from the electricity sector. This analysis utilizes unique data on coal mine and power plant operation to estimate the impact of supply and demand factors on mine closure. We model closure as a function of expected profits, which allows us to compare the effects on mine closure of specific demand and supply shocks to expected mine profits. Our results suggest that each shock substantially affected coal mine employment. Increasing costs of producing Appalachian coal have had the largest impact on closures with lower natural gas prices and lower electricity demand each accounting for a substantial number of closures additionally.

Keywords: coal mining, firm exit, fuel procurement

JEL Classification: L510, L710, Q350, Q530

Suggested Citation

Jordan, Brett and Lange, Ian and Linn, Joshua, Coal Demand, Market Forces, and US Coal Mine Closures (April 24, 2018). CESifo Working Paper Series No. 6988, Available at SSRN: https://ssrn.com/abstract=3194429

Brett Jordan

University of Alaska ( email )

United States

Ian Lange (Contact Author)

University of Stirling - Department of Economics ( email )

Stirling, FK9 4LA
United Kingdom

Joshua Linn

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
85
Abstract Views
581
rank
345,887
PlumX Metrics