Let’s get one thing straight: Coal is not cheap. And since coal power plants generate half of America’s electricity, that’s not good news. Especially when you consider coal prices only look to vault upwards in the future. Thanks to the fast-rising price of U.S. coal, you can probably look forward to another $20 added to your monthly utility bill this winter heating season.
So much for all that much-hyped propaganda from “clean coal” advocates about coal being the cheap energy resource right here at home.
An eye-popping chart from the U.S. Energy Information Administration shows that the final settlement price in the Central Appalachian Coal Futures market has doubled from $60 in January to about $120 in early September. (Check out that link . If you scroll down to the second of two charts, you will see the flat prices in the seven years before 2008.)
That’s another way of saying that the same type of big Industry folks who profit from the high prices we pay at the gas pump are now cashing in on sky-high coal prices. In an August 2008 Forbes article entitled (cleverly enough), “Stoke Your Portfolio With Coal,” an industry analyst writes: “Looking for a way to add some heat to a portfolio that seems to have cooled? Check out the coal mining sector.”
Translation: If it bothers you to bankroll the obscene profits big oil companies like Exxon Mobil ($40 billion) and Shell are making, you will not be pleased to pad the wallets of Consol Energy, Arch Energy, Peabody Energy and Massey.
Not familiar with those names? You soon will be when you realize they are the ones benefiting from your increased electric bill..
Unfortunately, this isn’t likely to be a short term problem. The recently released second quarter financial reports of all the major US. coal producers celebrate rising prices for coal, and they are all projecting continued high prices.
Here’s the word from two of the Big Coal CEOs:·
- Peabody Chairman and Chief Executive Officer Gregory H. Boyce says we are in for a long ride: “The structural changes driving demand much higher than supply, across all coal markets, look to be very long-lived.” Peabody goes on to say they are raising prices in response to this happy state of affairs, leading them to project “significant earnings increases for many years to come.”
- Arch Coal reports calls current price levels “unprecedented” and like Peabody, projects a long run for these high prices: "Given tight supply conditions and strong demand for coal globally, we have reached price levels that are unprecedented," said Steven F. Leer, Arch's chairman and chief executive officer. "At the same time, we continue to believe these strong pricing levels are sustainable over the next several years.”
Affordable coal forever right here in the United States? Turns out that’s just another lie from your “friends” in the coal industry.