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spend are going to spend less. This year, only 25% will spend $25 million or more. Last year that figure was 37%. Coal operators will invest in opera- tions and equipment to reduce costs. With coal prices as low as they are, it's one of the few remaining levers they have. Coal operators are frustrated. When asked: What will affect the U.S. coal industry the most and how should it pre- pare? Many of the responses cited cheap natural gas, the EPA and the Obama administration. When asked "which of the 2016 presidential candidates best understands America's energy needs and the importance of coal?" the answers favored the Republican party and fol- lowed current national polling trends: Donald Trump (48%), Ted Cruz (16%) and all others were in the single digits, including Hillary Clinton (5%) and Bernie Sanders (0%). Several respondents point- ed out that none of the candidates have expressed a true understanding of America's energy needs. When asked about what specific issues will affect the coal industry most in 2016, politics and policy and power plant regulation scored the same high scores (4.7/5) as the leading concerns. Coal prices remained ahead of the economy. Reading between the lines, the miners are saying that prices and the economy do not matter if their customers are not allowed to burn coal. Limited production capacity and a retiring workforce was the least of their concerns. What to Expect in 2016 and 2017 The 2015 drop in coal production, which was the largest annual decline, occurred in all coal-producing regions. The Appalachian region took the biggest hit with a 13% decline. Southern West Virginia saw coal production decline by 18% while northern West Virginia declined by only 4.4%. Production in the Interior region, which includes the Illinois Basin, declined by 10.5% in 2015 — the first decline since 2009. Production in western Kentucky and Indiana fell by 14% and 12%, respectively, while Illinois output only fell by 3%. Western region production declined by 10.6%, with production falling below 500 million tons for the first time since 1998. Coal production is a function of con- sumption and the amount of coal con- sumed to produce electricity fell by 11% in 2015. Lower natural gas prices were a primary factor. As the accompanying chart shows, coal consumption for elec- tricity generation declined year-on-year in every region while gas consumption for electrical power generation grew in every region. Naturally, these soft market conditions will act to hold down prices for prompt delivery. With the exception of Western bituminous, spot prices for coal fell across the board in 2015 (see Figure 3). By the end of 2015, spot prices for Northern Appalachian coal had dropped 25% to $48.95/ton from $65.30/ton at the same time last year. Spot prices for Central Appalachian coal dropped 22% to $43.50/ton from $56.10/ton. Spot prices for Illinois Basin coal dropped 27% to $32.60/ton from $44.70/ton. Prompt prices for Powder River Basin coals dropped nearly 6% to $10.90/ton from $11.55/ton. Meanwhile, prices improved for Western Bituminous coals moving up to $40.65/ton from $37.75/ton one year ago. Retirements of coal-fired power plants, stemming from both increased f o r e c a s t 2 0 1 6 c o n t i n u e d 20 www.coalage.com January 2016 Figure 7 — What will be the single most expensive item the mine purchases in 2016? What will it cost, in round figures? Continuous Miners (9) $125,000-$1 million Conveyor System Upgrades $4.5-$5 million Diesel Engines $200,000 Dozers (new, 2) $3-$4 million Dozers (used, 2) $1-1.2 million Dragline Repair (3) $750,000-$1.5 million Dust Sampling Systems (2) $250,000 Equipment Rebuilds (2) $5-$10 million Equipment Upgrades (3) $10-$15 million Front-end Loader (2) $1-$1.3 million Haul Truck(s) $3.75-$7 million Highwall Miner (2) $4$6 million Longwall Mining Equipment $55 million Longwall Shearer $2 million Longwall Shields (2) $75-$90 million New Equipment (4) $3-$9 million Prep Plant Upgrade $4 million Preparation Plant $18 million Primary Loading Tools (2) $5-10 million Proximity Detection $3 million Quality Control $20,000 Reclaim System $250,000 Roof Bolter $500,000 Shaft Construction (2) $11-$50 million Shovel Bucket $800,000 Used Surface Equipment (2) $750,000-$3 million Used Underground Equipment (2) $500,000-$750,000