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Competition in the U.S. Energy Industry
stripping ratio. Mining conditions influence the underground
picture too, but not as significantly. We do know, however, that
both underground and strip mines achieve optimum scale output at an
annual output level of at least several million tons. This
condition, along with the previously discussed need for large
reserves and large scale output to serve the electric utility and
coal gasification markets, strengthens entry barriers in the coal
industry.
EFFECT
OF SHIFT TO LOW SULPHUR WESTERN COAL
There are a
number of cross-currents at work in the coal industry which may
lead to profound changes in the industry's market structure. We
have touched on some of them in the previous section dealing with
entry conditions. Several others are related to the possibility of
a massive shift in output from the high sulphur eastern coals to
low sulphur coals found in the west.
This
section studies the problem from two aspects: the possibility of a
shift to the use of western coal to meet environmental standards on
air pollution, and the shift to the same low sulphur western coal
reserves to furnish feedstock for coal gasification. The motivation
behind the move toward western coal in these two cases differs: in
the first the search is for low sulphur coal; in the second low
sulphur content of the coal is an immaterial consideration. Of
primary concern is the low mining cost of the western coal reserves
and their noncaking characteristics which encourage their use in
coal gasification. The dual motivations lead to the same coal: that
found in the Rocky Mountain and Northern Great Plains provinces,
principally in Montana, Wyoming, North Dakota, and New Mexico.
Should coal gasification flourish and the western states supply the
coal, and should pressure continue to use low sulphur coal, we
could witness a dramatic westward tilt in the location of the coal
industry. This development would have not only locational
significance, it might also influence ownership patterns in the
industry.
Impact
of Air Pollution Standards
Recently
developed standards for stack gas emissions at the federal, state,
and local levels make the continued use of much of the country's
coal for power generation problematical. In many areas of the
country, present and projected standards rule out the use of high
sulphur coals which predominate in the eastern coal
fields—those fields nearest the major coal markets. To render
high sulphur coals acceptable, one of several developments must
occur: either (1) stack gas emission control devices must be
developed to reduce SO2 levels to satisfactory amounts,
(2) a way must be found to pretreat coal to reduce sulphur content
to acceptable levels, (3) coal must be gasified (and become a
low-sulphur-content fuel), or (4) emission standards must be
relaxed to permit the use of high sulphur coal.