2012-01-05 / Local & State

King Coal Makes Comeback

By Spencer Soper
THE ALLENTOWN MORNING CALL

ALLENTOWN, Pa. (AP) – When Peter Kupec was a boy, his mother cooked on a coal stove in the kitchen that heated the whole house.

Now 80, Kupec still uses coal to heat his Lansford home in Pennsylvania's anthracite region, which is estimated to have billions of tons of coal deposits to fuel industry and warm living rooms for centuries.

So he was surprised when he called a dealer a few weeks back to buy two tons of coal.

“They said `My God, I don't know when we can deliver it,”' Kupec said. “It might be six to eight weeks. There's no coal.”

Global demand and renewed popularity for the low-cost fuel have combined to put a strain on Pennsylvania anthracite supplies with a rather surprising result. People in the coal region are having trouble finding fuel for their stoves and furnaces.

There’s plenty of coal in the ground. But miners can't dig it up fast enough to satisfy an uptick in demand from dealers who want to ship it overseas or truck it to a house down the road. Much of the coal is purchased on contract by large industrial users before it's even extracted.

The situation underscores the complexities of global energy markets, showing how trade decisions and business climates in Asia and South America influence the relationship between a Pennsylvania coal hauler and local customers.

It also shows how coal, which over the past 60 years has faded from its position as a dominant home heating fuel to a small niche market, is making a comeback in the face of high oil costs. A ton of coal, which can cost about $180 in the coal region, provides the same amount of heat as 180 gallons of heating oil, which would cost $630.

That price difference has encouraged many Pennsylvanians to use coal for heat. About 1.4 percent of Pennsylvania households have coal as a primary heat source in 2010, according to the U.S. Census Bureau.

More than 2,600 households in Lehigh and Northampton counties used coal as a primary heat source in 2010, up more than 50 percent from 2007, according to Census figures. Thousands more use coal stoves to supplement oil and gas furnaces or electric heat, and those homeowners are burning more coal to offset high heat costs, coal industry experts say.

“We as a company are mining more coal, employing more people and packaging and selling more to the residential market than we ever have before,” said Dan Blaschak, vice president of Blaschak Coal Corp. in Mahanoy City. “When it comes to supplemental heat and saving money, there is no fuel like anthracite coal for doing that job.”

Hobel Coal and Fuel in Coplay has been delivering coal throughout the Valley for 70 years. And customers come to its yard from as far as New England to load small trucks, owner Michael Hobel said.

Most coal mined in the United States is burned in power plants to produce electricity. Anthracite has a higher carbon content and fewer impurities than other coals, which makes it more valuable. Besides heating homes, it is used to make steel, plastics and municipal water filtration systems.

Growth in countries such as China, which now imports coal because it burns more than it produces, has disrupted global markets. And international coal dealers have turned to Pennsylvania for anthracite as a result, industry experts said.

Lehigh Anthracite, which operates a 7,500-acre mine in Carbon and Schuylkill counties, is producing 30,000 tons of anthracite each month and has sold it all through 2012, manager Zachary Kroh said. International coal dealers are buying more Pennsylvania anthracite because they are worried about potential supply problems in South Africa and Russia, he said.

“These international buyers are looking to diversify their suppliers, and there's not a lot of anthracite around,” Kroh said. “We're doing everything we can to get more house coal on the market, it's just tough to meet those demands and our current orders.”

Coal miners can't react quickly to increased demand because the industry is heavily regulated, expanding is expensive, and it can take a year to order new equipment, said Ray Petrilla, vice president of Coal Contractors, which operates a mine near Hazleton. Mining companies have to determine if the increased demand will persist long enough to justify large investments needed to increase production, he said.

“Production may pick up to meet demand, but it doesn't happen on short notice,” Petrilla said. “Some of the coal that ordinarily has been available for the home heating market is being shipped to China. The market demand is really strong this winter, and there's not much the industry can do about it this year.”

Another factor constricting coal supply is household budgets strained by the recession, some coal dealers said. Heat customers would traditionally order coal in late summer and early fall, which spread the demand over a longer period. Fewer people have money to pay for their heating fuel in advance, so more orders come pouring in all at once when it's cold, dealers said.

Kupec got worried when he found out coal supplies were limited. He set his coal stove to burn slower, lowering the temperature in his home, and used an electric space heater. He was relieved Wednesday when he finally received two tons of coal from his dealer.

“I thanked the good Lord for that,” Kupec said.

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