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Why Coal Prevents West Virginia Democrats From Endorsing Obama

NEW YORK ( TheStreet) -- Coal doesn't know if it will vote for President Obama in November.

That's what the headline probably should have said, but the Republican National Committee's Wednesday email blast made it appear that Democrats have scuffled to the sideline in supporting Obama for 2012.

"Democrat Gov. Earl Ray Tomblin [of West Virginia] said he -- like Sen. Joe Manchin, (D., W.V.) -- does not know if he will vote for President Barack Obama or Republican Mitt Romney in the fall," said the email, which quoted a Charleston Daily Mail story.

A second excerpt of the story quotes Tomblin criticizing Obama for making it his mission to drive the coal and energy industry in West Virginia out of business.

Companies like Arch Coal (ACI - Get Report), Patriot Coal (PCX) and Alpha Natural Resources (ANR) -- which all have major Appalachia coal mining operations in West Virginia -- each have seen shares shrink by 41.4%, 31.1% and 19.8% year to date, respectively, largely due to incredibly cheap natural gas prices.

"We have a supply of natural gas that can last America nearly 100 years," Obama said during his January State of the Union address. "The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don't have to choose between our environment and our economy."

Politicians in West Virginia, fearful of what the rapidly sinking coal industry could mean to jobs in the state, are timid to endorse an energy policy that backs gradual transition by utility companies to the industry (natural gas) that's wrecking things.

"I suspect if natural gas prices are close to what they [currently] are for one, two years more, you're going to start to see some [coal] bankruptcies over there." said Mike Tian, an equity analyst who covers coal for Morningstar

Cheaper natural gas prices give utilities and other businesses an incentive to invest in the hydrocarbon gas mixture instead of coal. But for Democratic politicians in West Virginia it's an awkward high-wire act. On the one hand -- and why Tomblin and Manchin have avoided open endorsement of the president -- it may appear to voters there that Obama, who has endorsed an energy plan to shift to natural gas and away from dirty coal, is the perpetrator of a waning West Virginia industry. Conversely, Obama is the most important figure in the party and can offer future key endorsements to the two politicians.
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