While the rising price of oil is quickly reflected in the dollars flowing into your gas tank, there's another energy source that's going up even faster than oil. In fact, the price has gone is up 100% in less than a year.
Benchmark prices for some grades of electricity-generating steam coal are more than $100 for a metric ton, double September’s price. Metallurgical coal, the type used in steel making, has tripled in some contracts.
Only a year ago, it was eye-opening to see met coal contracts coming in above $100, but to see steam coal at this rate is astounding. Little wonder that investors are ecstatic about the coal industry.
Year to date, shares of Arch Coal Inc. are up 41%. The biggie of the industry, Peabody Energy Corp., has waxed 24% -- and 94% from its August trough. ... Kohler rates Massey Energy Co. a buy for its concentration in metallurgical coal, the sweet spot of the market.
You may remember Massey Energy from the number of mine deaths, from their toxic flood 25x the size of the Exxon Valdez disaster, and for having the CEO take a supreme court judge on vacation to the Rivera while his company was waiting for a decision on a $76 million judgment. Regardless, as far as the investment community is concerned, Massey is a "buy."
Nothing like that disconnect between dollars and damage.
But while the cost to the consumer hasn't been as obvious as the cost of oil, sooner or later (probably sooner) that cost is going to show up in your electric bill. And, like oil, it'll show up in the cost of everything manufactured using electricity, which is... pretty much everything.
And of course, when it comes to coal, the cost isn't all in the bill.
What we are paying up for is the dirtiest fossil fuel in the ground, infamous for wielding a heavy hand in the planet’s warming. In Beijing they wear surgical masks to ward off the soot from coal-fired plants, which then drifts across the Pacific to further foul the air over Los Angeles. That’s not all. Black lung disease, mercury and sulfur emissions and the ravaging of Appalachian mountaintops are part of the legacy that keeps our lights on.
The only good thing about prices this high is that it should help to encourage the rapid expansion of solar and wind.
Comments are closed on this story.