Coal news and updates

The “war” on coal is, to us, about as real as the "war" on Christmas. It’s an artifact of political speech which, by its nature, does little to discourage exaggeration. Statements like that may also provide a sense of direction but no clear energy policy guidance. What we see, instead, is a revival of former Vice President's Cheney’s energy policy: pro-supply measures and little interest in either environmental niceties or economics.

 

We knew a group of economists called in by Cheney's policy advisors. They discussed electric power pricing and the power of the free market to reduce demand by encouraging more efficient use of energy. The policy advisors told the economists that they did not like a policy of doing more with less. The economists, all staunch conservatives, were left to wonder if that meant the government wanted the country to do less with more.

 

Thus, for a start, we can reasonably anticipate less energy regulation--a clear, oft stated aim of Republicans. The most obvious political target, the EPA’s Clean Power Plan, will be reviewed/rewritten and probably neutered

 

The “war on coal” is really a war on profitability of electric power generating plants of all varieties. And the war had two causes: deregulation and fracking. Perhaps most of the injuries in this "theater of war" have been suffered by coal plant owners. But it’s not their fight alone. Smaller, aging nuclear facilities are also being shuttered as uneconomic.

 

Will this lead to a revival of coal? Not likely. We’re probably talking about some plant life extensions for existing units. New power plants last 40 years. New presidents, no matter how sympathetic, can’t last more than 8. Power plant builders have a long term horizon.

 

Two things to look for in the coming days: is the war on coal a priority for the new administration’s first 100 days? We would bet not. Second, we would expect a gradual softening in rhetorical tone.

Source: OilPrice.com