Liam Denning is a Bloomberg Gadfly columnist covering energy, mining and commodities. He previously was the editor of the Wall Street Journal's "Heard on the Street" column. Before that, he wrote for the Financial Times' Lex column. He has also worked as an investment banker and consultant.

In Donald Trump's quest to MAKE AMERICA GREAT AGAIN, superlatives tend to outweigh nuance. Anyone in the coal business taking heart from the Republican presidential candidate's speech on energy should keep that in mind.

Trump told his audience in North Dakota on Thursday that he will, in broad terms, roll back the Obama administration's environmental measures and encourage more production of domestic sources of energy, including oil, coal and natural gas. He also promised to "save the coal industry" (which, you may have noticed, is struggling).

And here is where the details, possibly obscured by the odd oratorical flourish ("We're loaded"), actually start to matter.

In Trump's telling, the coal industry has been crushed by regulations aimed at curtailing mining and cutting emissions from burning it. And it's true that, for example, investing in the equipment needed to satisfy tighter guidelines such as the Mercury and Air Toxics Standards does make coal less economical to its biggest customers, electricity generators, and has led to plants being closed.

But the bigger threat is more prosaic: abundant natural gas from the shale boom.

Feel the Burn
Gas has been taking market share from coal in power generation since 2009
Source: Energy Information Administration
Note: Utility-scale generation only.

The trend of gas taking market share from coal began in earnest in 2009 -- which just happens to be when the cost of gas to produce electricity collapsed.

The chart below shows the fuel cost to generate power from coal or gas for a typical plant. Obviously, plants differ by region, age, efficiency and other factors, so this is just illustrative.

For this one, assume the gas-fired plant converts heat to power at 45 percent efficiency -- or, said another way, has to burn about 7.6 million British thermal units of gas to produce 1 megawatt-hour of electricity. For the coal plant, with 35 percent efficiency, the fuel requirement is about 9.75 million BTUs. Each ton of Appalachian coal contains 24 million BTUs. Now, put it all together:

The Enemy Within
The fuel cost to generate power from gas has collapsed since 2009, making it much more competitive
Source: Bloomberg, Energy Information Administration, Bloomberg Gadfly analysis
Note: Assumes heat rate of 7.58 million BTU per MWh for gas, 9.75 million for coal and 24 million BTU per ton of coal.

So while rolling back some environmental standards on coal-fired plants would likely help keep some more of them open, encouraging more fracking simultaneously would mean more cheap gas to keep taking away coal's market share. That's just competition.

Now, it is possible that a Trump administration might also do its bit to encourage the construction of more plants to export liquefied natural gas, which would tend to push prices up, helping the miners. But as recent turmoil at Cheniere Energy shows, the global LNG market is glutted already. Moreover, by encouraging more fracking of shale, Trump's policy would also tend to raise oil production, having the side effect of depressing global oil prices, which are in turn linked to LNG prices, meaning...

Yeah, yeah; I get it. You've stopped reading already.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Liam Denning in San Francisco at

To contact the editor responsible for this story:
Mark Gongloff at