Rick Perry tries to make the economic case for coal, screws up the economics part

Experts agree coal is not coming back, but Perry repeated the claim nonetheless.

Energy Secretary Rick Perry speaks at the Department of Energy in Washington, June 29, 2017. CREDIT: AP Photo/Susan Walsh
Energy Secretary Rick Perry speaks at the Department of Energy in Washington, June 29, 2017. CREDIT: AP Photo/Susan Walsh

Secretary of Energy Rick Perry toured the Longview coal plant in West Virginia on Thursday with the state’s congressional delegation. During the visit, Perry’s tentative grasp of economics was on full display, as he told the crowd that demand for coal would follow supply.

Given a generous reading, Perry is referring here to Say’s law, also known as the law of markets, which has been rephrased as “supply creates its own demand.” In fact, the classical economic theory could be more accurately rephrased as “the total demand of an economy will meet the amount of supply,” although Keynes and the Depression called Say’s law into rather dramatic question.

The rule does not apply to individual products, such as coal (or horses and buggies, or typewriters).

But Longview is an odd place to tout economic theory: The plant, which went online in 2011, went bankrupt in 2013. At the time, the Wall Street Journal blamed low natural gas prices for the plant’s economic woes. As a merchant plant, Longview sells electricity on the open market and is susceptible to price fluctuations as demand moves to lower-cost options.

Ironically, Perry gave his “little economics lesson” just days after West Virginia University released a report that echoed numerous recent analyses in stating coal demand will not be coming back. The report predicts that demand will remain in the 80-million-ton range through the first part of the next decade and will fall below 80 million tons by 2030 — and it’s not expected to rebound from there. The report attributed the long-term outlook for coal production to low demand overseas, declining productivity in West Virginia’s mines, and a decrease in U.S. coal-fired power plants — which, again, is tied to low-cost natural gas prices as well as increased emissions standards and more economical clean energy. (West Virginia’s biggest utility even announced this week it would invest in two more wind farms.)

The WVU report came out in conjunction with the West Virginia Coal Forum, a state-sponsored event that brings together coal producers, politicians, and researchers to discuss the industry’s future. The state’s beleaguered industry has more friends than ever in the federal government now that Donald Trump is president.

“I think the Department of Energy has been engaged with us around the high-efficiency, low-emission type unit that we are,” Longview’s chief operating officer, Stephen Nelson, told the West Virginia Gazette. “There’s been a lot of interest in looking at coal-fired power plants like Longview as a future for clean coal, and I think that’s his focus.”

As a newer coal plant, Longview is much less carbon-intensive and more efficient than some of its decades-old brethren. But that doesn’t make it clean, pointed out Bill Price, a West Virginia-based organizer for the Sierra Club’s Beyond Coal Campaign.

Clean coal is “just a marketing phrase,” Price told ThinkProgress. “In West Virginia, [there has been] devastation from mountaintop coal mining, water pollution, pollution coming off sludge dams, and [health impacts] to workers like black lung… you have to take the whole lifecycle — or death cycle — of coal into account before you start touting anything as clean,” Price said.

The administration has repeatedly pledged to help turn coal’s fortunes around, which could backfire for people who aren’t given opportunity for other industries.

“I think Secretary Perry’s visit certainly misleads the people of West Virginia — and some policy makers — that coal is clean and that coal is coming back,” Price said.

The Pittsburgh Post-Gazette on Thursday reported that the Longview plant had put up a banner for Perry’s visit, a tip of the hat to Trump’s campaign slogan and, perhaps, to the administration’s erroneous claim that mining jobs have had a 50,000-strong uptick since the election:

“This is what great looks like!”