Editor's Note: Murray Energy Corp. Chief Executive Officer Robert Murray is fearful for the Ohio Valley's future as factions of the federal government move to further regulate the coal mining industry. Murray gives his views of America's current political climate and what needs to change this year as he joins us for the Sunday Sit-Down.
-- Many people believe the federal government, through the U.S. Environmental Protection Agency, is waging a war on coal. How concerned are you that your business could be regulated to such an extent that it would make coal mining unprofitable in the near future?
Murray: I am 100 percent certain that will happen, the way it's going. I spent three days in Washington (in December) and met with (a number of) United States senators ... and (some of) the top people in the House of Representatives. ... I also spoke at a dinner in St. Clairsville that was 70 percent my employees and 30 percent vendors. And if I don't give a speech about what's going on in Washington, (my employees and vendors are) unhappy with me and they ask me questions. This is part of what I said:
"We are observing, with every passing day, the damaging regulatory actions of President Barack Obama, his appointed cabinet bureaucrats and his supporters in the House and Senate. ... Nothing that has been done has even slowed them down, let alone stopped them. Unquestionably, they're moving forward rapidly. ... Our (coal) jobs provide the lowest cost electricity in America.
"While the Republicans in the House have passed a number of pieces of legislation including the so-called TRAIN Act to overturn the destruction of coal by Obama's U.S. EPA, it's difficult to get it approved by the Democrat-controlled Senate, and even then Mr. Obama has said he'd veto it.
"We need Republican control of the Senate and Mr. Obama sent into unemployment to correct the damage to our industry in America already caused by him and his Democrat followers. The Obama administration has declared war on coal and has been speeding along unrestrained with a series of U.S. EPA regulations. ..."
Those aren't the worst ones. Already, I have lost 1.3 million annual tons of sales due to the cross-state air pollution rule alone. Those were five-year contracts and about $100 million worth of coal. Other utilities are telling me they're canceling more contracts. I've been able to (export) coal and sell it in the world market to offset some of those losses. ... If I hadn't been doing that, we would have been in massive layoffs already. But I don't know whether I can continue to do that.
China is building a new 500-megawatt power plant every week, while Obama is wanting to eliminate our coal with wind and solar. Coal powered electricity is 4 cents per kilowatt hour. Gas-fired electricity is about 11 cents per kilowatt hour, and usually there's no pipeline big enough to the power plant. Wind, if it blows, is 12 cents per kilowatt hour, solar is 22 cents per kilowatt hour. But wind and solar get (massive federal subsidies). ...
Obama's already canceled 81,500 megawatts of coal-fired electricity in the United States. That's 7 percent of the electricity in America. That's the 4 cents per kilowatt hour of electricity, not the 22 cents per kilowatt hour that he advocates through his green program.
-- In your opinion, what would happen if this administration got its way and destroyed coal?
Murray: To me, this whole thing is a human issue because I know the names of our employees here. Let's take East Ohio as an example. I have 1,600 employees here. Penn State says for every one of those jobs, there's up to 11 created in the local economy for the goods and services for our employees. If you take my 1,600 jobs times 11, that's about 18,000 jobs in this area that I account for. If these mines go, these malls will be empty. And the sad part about it is if anybody here owns anything, it's their home. If they lose their job and all these people lose their job as Obama is attempting to do and destroy the economy of this area ...
I don't frighten easily. I wouldn't be in the coal business if I did. But I am scared to death for the people of the Tri-State area. This place will be devastated. I'm 72 years old, I'm spending half of my time in Washington, I've had four strokes and lots of TIAs, one in the presence of the Speaker of the House ... I can't keep it together, and I'm losing ground.
... The most recent study says that not only has (Obama) destroyed 81,500 megawatts (of electricity generation), but 1.4 million jobs, and he's increased electric rates $184 billion. This is a radical, incompetent - I don't know where the radical starts and and stops and the incompetence starts and stops - but he's destroying particularly this area of America. There's no exaggeration here.
-- What would you say is the most damaging regulation currently facing your industry?
Murray: The worst thing that Obama's got out that will destroy these mines here is the stream buffer rule. ... The stream buffer zone rule says that wherever you've got a ditch on the surface, even if there's no water in it unless it rains, you can't mine under it. What that does is eviscerate our underground mining, it puts us out of business. ...
The stream buffer zone rule is a bad one. They also brought in Joe Main, safety guy from the United Mineworkers, he's vowed to get a 1 milligram per cubic meter dust standard in our mining equipment. It's not achievable with today's technology. And there's no way that it will help the health and safety of our miners. I said if you really want it, we'll put the air stream helmets on, and then the air they breathe will be just as clean as the air in this room. And they said no, we want the environment in the mine to be down to that level. This is the UMWA behind this. That's why the UMWA is virtually extinct. That's how the UMWA operates. Of course they endorsed Obama, told their members to vote for him, and now their jobs are being eliminated by him and his administration.
-- You're very familiar with the politics of coal in Congress. First, how do those politics play out, and second, who among the region's Congressional delegation would you consider to be not a friend of coal?
Murray: It's very simple with the politics - the Democrats will not go against President Barack Obama. On the side they'll tell you that they don't support his type of leadership, but they will never go against him.
The biggest enemy to this area is Sherrod Brown, (Democrat) senator from Ohio. Another big enemy from this area is (Democrat senator) Jay Rockefeller, he's a carpetbagger who came into West Virginia and he claims he supports coal, he's only supported the United Mineworkers, he's never supported coal.
We did a pretty good job of cleaning house around here ... the last (election). And these folks have stepped up pretty big, (Republican U.S. Rep.) David McKinley in particular is an outstanding congressman and representative of this area. Bill Johnson and Bob Gibbs from Ohio have done great jobs. ... Nationally, with the exception of maybe two or three senators, (the Democrats) won't go against Obama.
One of those senators happens to be (Democrat) Joe Manchin of West Virginia. He will go against the Obama Administration - and has. Ben Nelson of Nebraska and Mary Landrieu of Louisiana at times will go against him, that's it. There isn't another Democrat, particularly Bob Casey of Pennsylvania is a terrible one, that support the Tri-State area and the jobs of the people that live in the area. ...
I was quoted in Chief Executive Officer magazine (in December) as saying this: "The destructive presence of President Barack Obama and his radical followers and appointees throughout government and his determination to pick winners and losers is beyond any conception that I had before. This is a human issue to me because I know Americans whose lives and livelihoods he is destroying. There's no other word for what he's doing to the coal industry.
"Congress must enact a number of current proposals that would stop the regulatory rampage of the Obama Administration, particularly of the EPA. In addition, we must put Mr. Obama and all of this appointees into unemployment as quickly as possible. ...
"The (EPA) regulation that is the most damaging of all is the so-called cross-state, air pollution rule, which becomes effective (today) and would put new limits on sulfur dioxide and nitrogen oxide emissions from power plant smokestacks in 27 eastern states. Mr. Obama and his radicals deliberately didn't leave time for electric utilities to comply with this regulation ..."
While I was in Washington (in December for a U.S. Chamber of Commerce event,) I confronted Jon Wellinghoff, he's the chairman of the Federal Energy Regulatory Commission. He's supposed to be looking at reliability of power supplies in America. ... They've not done one study on the reliability of eliminating 7 percent of the nation's electricity (through the EPA rule) - the 4 cent per kilowatt hour electricity - what it's going to do to supplies on a regional basis. ... I said Mr. Wellinghoff, isn't it your job to do the reliability studies, to find out the impact of these regulations before they go into effect? And he said we don't need the studies, there's regional studies, there's grid studies, state studies. Well, we're going to have brownouts and blackouts, it's going to happen. I kept asking him about it, but he wouldn't answer my questions. ...
The people in this area want to work in honor and dignity, but they're being denied the right to work, and they really want to work. ... They can't leave the area because they can't sell their homes to anyone. People who want to work and be a producer in the American economy are forced over to the negative side and they stay there the rest of their lives. That is not America. It takes a job, it takes a standard of living, and Obama is destroying it all. ... I'm scared for this area.
-- In the past few years, what changes have you seen in the scientific community concerning global warming?
Murray: The fraudulent individuals around the world who have attempted to capitalize on the promotion of their theory that the Earth is warming are now finding out that it's just not true. ... They did it for what I call crony capitalism - to make money off global warming. ... Albert Gore has made hundreds of millions of dollars over his hoax, and now they're finding it's simply not true.
... So it's changed, and the vast majority of Americans today know now that this was a hoax and it was done to get money from America for other countries for people in America to make money off of it. ... Now some want to create a commodity market in carbon tax credits. So now you've got Wall Street and all these commodity brokers in the United States, they want to see the legislation because it creates a market to trade ... carbon credits. So all of these people, for reasons not very pure, not very honorable and certainly not honest, are perpetuating the fraud. People like me, they called me a skeptic. Now I'm right ... and I see America moving beyond that issue.
... The Democrat party has always tried to represent itself as the party of the middle class, of the working man. Back in the 1940s, post World War II, that was probably true. But that changed a long time ago. Now they're the party of the elitists in California, the movie stars, people with a lot of money. ... They don't represent working men at all.
-- You've been in the coal business a long time. Can you briefly recap your career and how you came to found Murray Energy Corp.?
Murray: I was the only child still at home when my father was paralyzed from the neck down in a mining accident in 1948, I was 9 years old. My mother subsequently contracted cancer. My dad lived that way for 21 years. We lived in Shadyside. I was born in Martins Ferry, lived in Flushing when my dad had worked for Wheeling Township Coal Co., and then we moved to Shadyside. My mother's family was all from Bethesda, so during the two years he was in a coma after the accident took place, I lived with aunts and uncles in the Bethesda/Barnesville area. When we finally got dad out of the hospital we moved to Bethesda and I supported them by mowing 32 lawns as a young boy. We ate a lot of 'sop.' Bill Bolen would save the best bones at his IGA for me and he'd leave some meat on them. Mom would boil them down and put them over bread, that was our meat.
... I went through Bethesda as the valedictorian of our class. Belmont, Bethesda, Morristown got together and offered to send me to medical school if I would come back and replace the doctor in the area. So while I was considering that a coal company offered a scholarship and I competed with 300 boys ... and won the scholarship to study mine engineering. ... My mom and dad had never seen $6,500 before. ... So I became a mine engineer rather than a physician.
... The scholarship was from the North American Coal Corp., which was a large producer of coal in this area. I was with them for 31 years. At the age of 29 I had 7,000 people working for me, and for 23 of the 31 years I was there I basically ran the company. ... Oct. 15, 1987, four days before 'Black Monday,' a friend of the family that owned North America and controlled it fired me. They (wanted) to dissolve North American as an Ohio corporation and reincorporate it in Delaware as a way to walk away from retiree benefits for 1,800 pensioners who I had worked with. I disagreed. I didn't think they needed to do it. So (they fired me). The problem for them is that during those 31 years I had taken stock options ... But my years of experience with North American paid off because they had a contract where they used the utilities' money ... and managed the mines for a fee. It didn't work. ...
When they fired me ... the chairman, the CEO and the president the then Cleveland Electric Illuminating Co. were outraged. ... They had the right to take the stock, and they were quite unhappy with North American. ... I called and told them 'Why don't you buy the mine and I'll manage it for you.' ... They said they didn't want to own any more mines, but that if I bought the mine they'd buy my coal. ...
So I started a seven-month sojourn. I got a $66 million guarantee from Cleveland Electric (which eventually has become FirstEnergy). I bought the mine. It was by the grace of God I got here because the United Mineworkers didn't want me to have it because North American had walked away from the retiree medical. ... (The sale) had to be approved by the utility commission of Ohio, and at that time there was a union lackey for a governor named Richard Celeste. The union called Celeste and told him not to approve the loan guarantee. The matter when on for about five months ... and the whole deal was about to crater. ... The folks at (Cleveland Electric) got North American to do a deal with the United Mineworkers on the benefits, and then the United Mineworkers called Celeste and told him to approve the loan. ... I started with this mine, the Powhatan No. 6 mine, and changed the name to the Ohio Valley Coal Co.
When I bought the mine, it was producing 1.2 million tons of coal per year. I told (my investors) that I could produce 4.3 million tons, but I would put a longwall in, change the mine cars and track to conveyor belts. I told them I'd buy a place on the Ohio River where the power plants are and I'll sell that extra 3.1 million ... to other utilities ... to keep their coal prices at $18.75 per ton in a $30 per ton market. I was able to keep that price for 10 years. ...
When the Clean Air Act was coming in ... you knew that the legislation was going to have standards for sulfur dioxide, nitrous oxides, mercury and particulate matter, and the only way to get them out was to install scrubbers or clean coal technologies. I took every power plant in the country, because every plant is designed for a specific coal, and I drew concentric circles out from those power plants until I found the coal ... that that plant was designed to burn - and I acquired that coal. ...
This mine (Ohio Valley) now mines 6.8 million tons per year from the 1.2 million under North American. It now has almost 700 employees. I did build a harbor facility on the Ohio River. ... I started trucking to the harbor, then put in our own trains. ... I don't really want to truck any coal to the river but I must as (the trains) are so inefficient. ... I acquired more reserves here ... and (in 2000) came up with a plan to open AmericanEnergy's Century mine to the west of here. It has about 700 employees and is perhaps the most efficient mine in the United States - and it's a union-free mine.
-- Last question: the natural gas industry in our area is really growing right now, with some major players in the energy market - Exxon, Chevron, Shell - working in the local area. How does gas drilling affect your ability to mine coal?
Murray: Negatively. We own the coal, they've got to penetrate the longwall panels in our coal to get to the gas. Many oil and gas companies have a tendency to run over people. I personally believe we need all energy - we need coal, gas, nuclear, renewables - we need it all for this country. Low-cost electricity is a staple of life, and we need it all. ... With this boom many of my friends here have leased their gas rights under their farms to them. I want them to get their royalties, I want the drilling to get done. ... They can get their gas, but they have to work with us to sight in their wells. Because in a longwall panel, it's extremely dangerous to mine through a well. All I've said is move your well a few feet this way or a few feet that way to get it off our longwall panel. I'll work with you where we have room and entry mining, I can leave your well in a pillar and mine around it. But in a longwall you have to take it all in those panels. It's $1 million every time you mine through a well, it's $8 million to mine around a well. But I have shown them ... they can put every well in where our coal is if they'll work with us on the location of those wells.