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XMFSinchiruna (27.35)

Ground Control to Major Coal

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May 04, 2009 – Comments (9)

Not just for any Bowie fans out there, but i thought some of you might appreciate my reaction to this coal rally, and in particular with respect to Patriot Coal:

http://www.fool.com/investing/small-cap/2009/05/04/ground-control-to-major-coal.aspx

 

The article fits with earlier observations from my roving canary with respect to Massey, Arch, and CONSOL:

http://www.fool.com/investing/general/2009/04/30/your-very-own-canary-in-a-coal-mine.aspx

 

See also:

Peabody's Play Within a Play

When Blazing Furnaces Go Stone-Cold

Reincarnation of the Decoupling Debate

 

You all know I'm long-term bullish on the entire coal sector, including the tronger domestic ones... but the timing and character of this rally appear suspect to me. I'd love to know your thoughts, Fools!

 

I will say, though... it's been some five-day rally! Certainly convincing from a technical perspective.

 

 

 

 

9 Comments – Post Your Own

#1) On May 04, 2009 at 5:09 PM, motleyanimal (87.23) wrote:

This seems to be an appropriate video to add to your post. I don't know what to say about coal, it seems doomed long term, but I do have a small position in EEE.

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#2) On May 04, 2009 at 5:12 PM, kdakota630 (29.46) wrote:

Your thinking is pretty similar to my line of thought.

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#3) On May 04, 2009 at 5:13 PM, XMFSinchiruna (27.35) wrote:

motleyanimal

I certainly hope that an alternate energy source is found quickly. :)

But any transition will tak some time, so perhaps I should qualify long-term as perhaps not the generation-long type... but more of a safe bet from a 3-5 year time horizon sort of context.  

Thanks for the soundtrack.

Incidentally, my wife had never heard Space Oddity before. :) I blasted it for her this afternoon... hat a great tune! :)

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#4) On May 04, 2009 at 5:31 PM, devilinside (72.50) wrote:

Now this is my kind of conversation. I have posted some upbeat outlooks for coal. Now I want it to be known that I think coal is a dirty 4 letter word, but one that we can't live without in the near term.

Obama wants to do away with coal, but as in many of his rehtorical comments he gives no real plan for doing that. How in the world do you do away with coal when it accounts for over 50% of power generation and you just can't produce steel without it. The furnace will not go cold anytime soon.

I have stated that there are technologies on the horizon that will reduce the coal carbon footprint by 90%. Go to GLW website and check out their research in filtering technology. But it will take 10 years to bring it to market.

I would love to see other technologies come to the market that would reduce the use of coal. All my research has brought me to the conclusion that coal can't be totally eliminated.

So I'm asking all the fools to give me some reason to not be bullish on coal over the next 10 years. Is there any technologies that can replace coal in the that short of time spane?

The coal sector is overheated at their current price levels. I hope that there is a pull back and I think there will be in the short term. Lucky me, I'll add to my position on Patriot Coal when it does.

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#5) On May 04, 2009 at 5:48 PM, XMFSinchiruna (27.35) wrote:

devilinside

Some random materials on the alternative energy debate to spice up the mix:

http://www.fool.com/investing/high-growth/2008/06/30/taking-the-pulse-of-the-caps-blogs-solar-power.aspx

As I said, I certainly hope that at least one alternative source becomes viable over the coming decade, but I also think it could take about that long to execute any such strategy on a significant, global scale.

Coal remains a strategic asset, and particularly China ... which Peabody Energy expects to become a net importer this year!

 

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#6) On May 04, 2009 at 6:06 PM, devilinside (72.50) wrote:

You will get no argument from me for decreasing the use of coal at least in it's present state of carbon output.

But rational thinking must prevail when it comes to investing our hard earned dollars.

Alternatives:

1. Solar: Too expensive and takes up to much space and water. The environmental groups are putting a real damper on this one.

2. Nuclear: Again it takes 10+ years to build one and again the environmental groups are strongly against it. That is a shame since it holds the greates promise to ge us off of coal. And Obama won't support it.

3. Hydrogen: It takes more power to produce Hydrogen than it can replace as an alternative source. This is one of my favorites for the future. But I probably won't see it come in my life time.

4. Natual Gas: NG is not as cost effective as coal but it would be cheaper than the Cap-and-Trade. Power producers are probably already looking at this as an alternative if the Cap-and -Trade is implamented.

5 Wind Power: It has the "Not in my back yard" stigma. At best it could only replace 15% of our energy needs.

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#7) On May 04, 2009 at 7:49 PM, devoish (98.56) wrote:

Alternatives,

Concentrated Solar Power, with molten salt heat storage. Kicken butt. Uses less land than strip mining coal (ok i don't know that, but people need to realize that coal uses lots and lots off land. It is not just the power plant.

UTX.

Solar photovoltaics, to expensive except with subsidies which it gets, but lots of room and work being done to improve it. I haven't checked recently but a lot of progress was being made.

Nuclear. Dead in the water for now. It destroys where it is mined, it is  never built on time or within budget, and it cannot get financing because it defaults half the time. I hate it, in its present form along with the environmentalists. i am happy President Obama included money in the energy budget for nuclear research to solve its problems. I do not want to offer  loan guarantees that will fail.

Hydrogen. I plead ignorance and defer to the devilinside.

Nat gas. best short to mid/term replacement, while we wait for solar/wind etcetera, whatever.

CLNE, WM, EPG, PWE

Wind power; fastest growing weed in the west, large landowners love it, it is new free money for them. it is cheap.  MOG-A recently purchased a the largest supplier of windmill blade pitch control systems. Vestas and Gamesa are my favorites windmill builders. AVAV also for small windmills on buildings. Push for offshore wind is tougher because presently...

Wave Power technology outperforms it with much less environmental impact. Wind is a waste of ocean space. Tidal power is moving forward also.

OPTT

Geothermal. HTM, ORA, for power plants with cheaper than coal electricity and to tap the free waste heat from conventional power generation, steel,cement manufacturing. RZ is a possibility if they learn to earn. LXU for inexpensive home heating/cooling.

Coal. stinks for all the well known reasons. cleaning it will drive the cost up over the price of wind/wave and maybe CSP.

So why it is up? President Obama included money to develop clean coal technology... a good idea. Thats the first half of what I have. The second half says it should be down. and up. President Obama's interior secretary Ken Salazar is reviewing rules about "tailing" dumpings from mountaintop removal processes. It is likely to become much more expensive to dump waste because the ability to dump into the nearest stream valley can and should be ended. The companys not engaged in mountaintop removal should be up, the ones that are, down. I do not know which are which.

Thats most of what I have.

disclosure; I have small RL positions in htm,optt,epg,(because I love the idea of investing in crap) pwe and pbw. Most of my stocks are selected by the Gardner Brothers and company.

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#8) On May 05, 2009 at 12:52 AM, angusthermopylae (38.77) wrote:

Just to pontificate about hydrogen a little bit...a little science, a little opinion...

Anything that speaks of using "hydrogen fuel" or not talking about an energy source, but rather an energy storage and transfer mechanism.  Pure Hydrogen is an element that it highly reactive with oxygen, releasing energy (usually in the form of heat as in explosion", but in some forms as pure electricity, such as fuel cells.)

Except for trace amounts given off by chemical reactions, hydrogen is never found in pure form...but there's lots of it in the form of water (H2O).  Hydrogen as a fuel has to be made by adding energy of some sort (electrolysis--"cracking" water by running a current through it, usually).  Because there is never 100% efficiency in both the creation and "burning" of hydrogen as a fuel, you never get out as much energy as you put in...go through 1 kWH of power to make the hydrogen,  and you might get 900kWH out...or as little as 300kWH if you put it into an internal combustion engine.

The trouble with the hydrogen-fueled car crowd is that they never answer the same question as the electric car crowd:  Where's the energy come from?  If it's coal-fired plants, then you're no better off...and possibly worse.

A hydrogen-fueled economy is possible, but the only benefit comes if the actual energy source is also clean--solar, wind, nuclear.  Otherwise, you're just moving the problem somewhere else, living your own "green" life while the smokestacks are hidden over the horizon somewhere.

While it sounds good (no CO2, only water as an emission), hydrogen fuels are just a replacement for batteries and power lines...a way of moving X kWHs from A to B.

I'm done...

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#9) On May 05, 2009 at 12:54 AM, angusthermopylae (38.77) wrote:

sorry...that should have been 1 kWH in, "900 WH" and "300 WH" out (0.9 kWH and 0.3 kWH)

...it's late....

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