If you think we’re in an energy crisis now, coal executive Steve Leer told a business audience recently, just wait until the U.S. starts seeing electricity shortages. Leer, chief executive of Arch Coal, told the local Association for Corporate Growth that about half of the country’s utilities will drop below recommended reserve margins — that’s the spare capacity they need to handle periods of peak power demand — by next year. About three-fourths of the country will be in that dire situation by 2013. What happens then isn’t pretty, Leer said:

The next crisis that we will face as Americans will be electricity supply. … The propensity for brownouts and blackouts will increase dramatically when something in the system breaks or when we have very heavy loads.”

The implication, of course, is that we need to burn a lot more of Arch’s coal to meet our needs. Despite opposition from environmentalists, Leer said, “We’re experiencing the biggest coal plant buildout in the US since 1980.”

Leer spoke Friday morning. It’s taken me a while to get these remarks out of my notebook, but his thoughts on the mergers-and-acquisitions climate also are worth passing along.

“We do see this (coal) industry going through another round of consolidation that is just getting started,” Leer said, adding that firms like Arch and Peabody Energy are “minuscule” compared with such diversified mining giants as Rio Tinto and Anglo American. “Given the value of the dollar, the international guys could come in and buy America very cheaply. That is one of our challenges.”

An audience member asked whether Arch might end up on the selling end of a transaction like Inbev’s proposed purchase of Anheuser-Busch. Leer responded:

We work for the shareholders and my glib answer is, we’re for sale every day. As a CEO and board of directors, if somebody comes in and puts an offer on the table that exceeds the share price, you have to think about it. Our goal is, if anybody wants to do that, we want to make it damn expensive.”

Leer also discussed:

• Illinois coal. “We’ll see a resurgence in Illinois in the next five to 10 years,” he said, but cautioned that it takes 5 years of permitting and construction to open a major mine.
• Congress, which he said “doesn’t have a clue” about energy policy.
• China, which passed the U.S. last year in carbon dioxide emissions. “This part of the world is not focused” on global warming, he said. “They’re focused on growing their economies, developing their infrastructure, and staying in power by growing their economies. CO2 is way down the list.”