Like Oil, Coal Prices Plunge

February 17, 2015

coalcools

Fossil Fuels, despite the best efforts of propagandists, continue to fall.  The “War Against Coal” turns out to be nothing more than the fossil fuel industry’s own “War Against Reality”.

CNBC:

The plunge in oil prices is mirrored by the cost of coal, which has been cut in half since 2011 and is expected to keep falling. What’s more, the drop in prices is adding pressure to U.S. coal producers.

Coal prices are falling for the same reasons crude is selling for half what it did last summer: There’s too much supply at a time when global demand for coal is cooling.

The latest evidence came last week, when China reported an unexpected 20 percent drop in imports, largely from lower volumes of coal oil and other commodities. After a streak of red-hot growth, China’s economy is downshifting as Beijing tries to reign in an overheated housing market and a lending boom that’s left behind a pile of bad debts.

The world’s largest consumer and importer of coal is also restricting imports of coal with high ash and sulfur content as it tackles a serious air pollution problem.

Demand is also falling in the U.S. as power companies continue to switch from coal to cleaner-burning natural gas. Thanks to the ongoing boom in natural gas production in the U.S., power companies in the lower 48 states consumed record amounts of natural gas to generate power last month as low prices made it cheaper to burn than coal, according to data from Thomson Reuters Analytics.

Bloomberg:

A 37 percent drop in natural gas prices since June has lowered what U.S. nuclear and coal plants can charge for electricity, potentially speeding the demise of generators teetering on the brink of closing.

While power plants that burn gas get a break on the cost side, allowing them to charge less for their product, coal and nuclear operators are seeing thinning profits. The gas squeeze comes as companies are upgrading plants to meet new environmental rules and demand weakens as a result of competition from solar and wind energy.

FirstEnergy Corp., NRG Energy Inc., and the generation unit that will be spun off from PPL Corp., are among companies most at risk from depressed energy prices, according to a Dec. 31 note published by UBS AG energy analysts. Exelon Corp., the biggest U.S. owner of nuclear reactors, said it needs to almost double power prices to keep a New York plant running.

“Natural gas prices have been falling and that’s generally not a good thing for coal and nuclear power producers who sell in competitive wholesale markets,” said Paul Patterson, a New York-based analyst for Glenrock Associates LLC.

“Generally speaking, cheap gas is bad for anyone using coal, and takes some of the fun out of nuclear, too,” said Philip Adams, an analyst for Gimme Credit LLC.

Mining Magazine:

Let’s face it, 2014 was not a great year for the international coal industry. Short of a black swan weather event or other calamity, 2015 is going to be another tough year as the industry shuts in more production, competes for markets in emerging economies and works to hold the line against further gas and renewable encroachment—both economically and politically.

Just as we swept up confetti from New Year’s celebrations, scientists worldwide brought us the sobering news that 2014 was the hottest year ever on record. With leaders from the Pope to President Obama calling for stricter environmental regulations, the global climate summit scheduled for Paris later this year will commence in the face of falling, flat and anaemic oil prices. In this scenario, natural gas will continue to gain favour politically over coal worldwide.

More troubling, gas-fired power plants frequently can generate greater profits, while coal-burners upgrade emissions controls ahead of tightening regulations.

 

 

10 Responses to “Like Oil, Coal Prices Plunge”

  1. Linda Plano Says:

    It’s great to see that at least some market signals are pushing us away from fossil fuels (my career as a scientist started with Ronald Reagan cancelling federal money for renewables, which “trickled down” and forced me to change from GaAs solar cell research to better-funded areas… in 1985).

    Is it wrong of me to get irritated with the climate skeptics in my life who are now going around saying, “See? Market forces will fix everything.”?

    • greenman3610 Says:

      Not sure how the market is going to fix Miami after it disappears beneath several meters of water.

      • ubrew12 Says:

        “Not a drop to drink over here in California”
        “If you don’t like it, why don’t you just move?”
        “Freezing over here in Boston”
        “If you don’t like it, why don’t you just move?”
        “Can’t get flood insurance over here in Miami”
        “If you don’t like it, why don’t you just move?”

        The free market has a ‘one-size-fits-all’ response to any future climate complaints.


    • “It’s great to see that at least some market signals are pushing us away from fossil fuels…”

      I guess that statement works if you don’t consider fracked natural gas to be a fossil fuel. It works even better if you don’t consider the methane leaks into the atmosphere from fracking operations to matter at all.

      Of course, you can engage in wishful thinking and believe that the 1% of world energy being supplied by wind and solar is what’s really impacting prices.

      You can also believe in the tooth fairy.

      Sorry to rain on anyone’s parade, but sadly, wishful thinking won’t make CO2 emissions go away. Sometimes reality sucks.

  2. redskylite Says:

    A strong reminder from the Scientific American Magazine (17-Feb-2015) why we need to stop our love affair with coal, even if you do not consider the output of CO2 into our atmosphere a problem.

    “The findings of this report are clear: While the U.S. relies heavily on coal for its energy needs, the consequences of that reliance for our health are grave”

    http://www.scientificamerican.com/article/how-coal-kills/

  3. redskylite Says:

    And make no mistake alternatives to close down the remainder of our coal burning power stations are available today:

    Energy and Climate Change Secretary Ed Davey said that the two wind farms, which combined will provide 2.4GW of capacity from up to 400 turbines, has “the potential to support hundreds of green jobs and power up to two million homes”.

    (Hinkley Point C nuclear power station is a project to construct a 3,200 MW two reactor nuclear power station in Somerset, England.)

    http://www.businessgreen.com/bg/news/2395739/government-green-lights-record-breaking-dogger-bank-offshore-wind-farm

    • redskylite Says:

      It is called progress ……………………………………………………………………

      The high voltage cable has a capacity of 1,400 megawatts and is expected to adjust for electrical fluctuations in Germany with wind and solar power. If required, the highly efficient DC power cable, together with Norwegian hydropower, can cover around three percent of Germany’s demand for electricity.

      Conversely, the cable can also deliver Germany’s excess energy to Norway.

      http://www.dw.de/norway-to-become-germanys-energy-reservoir/a-18256802

      • redskylite Says:

        And it is happening everywhere ……………………………

        India is about to start construction on what will be the world’s largest solar plant. As part of a redoubled effort to ramp up renewable energy capacity to help meet the developing country’s fast-growing energy needs, the 750-megawatt solar plant in Madhya Pradesh will be inaugurated on August 15, 2016 — India’s Independence Day. The plant will be significantly larger than the world-leading solar farms in California, including the recently-commissioned Desert Sunlight Solar Farm.

        http://thinkprogress.org/climate/2015/02/17/3623515/india-building-worlds-largest-solar-farm/

  4. climatebob Says:

    I just calculated that a few friends and myself have stopped paying $22,000 to the electricity company by installing solar panels. It would be good to see Teslar cars doing the same. It all needs to be on a much bigger scale than now. http://www.climateoutcome.kiwi.nz/clean-energy-alternatives.html


  5. […] of recent developments are altering the policy landscape around climate change—everything from falling profits (even outright losses) in the fossil fuel industry to falling costs andbooming investments in […]


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