Thursday, March 15, 2012

"It's Dark Days for Coal and Power Sectors" (KOL; BTU; ACI)

From the WSJ's Ahead of the Tape column:
To the uninitiated, "dark spreads" sound unpleasant—like ugly splotches found on mens' shirts on a muggy day. And right now, they aren't even fun for executives in the coal and power industries, especially as unseasonal warmth makes them sweat.


In those industries, the bigger the dark spread, the better since these are a measure of the wholesale margin power plants earn by burning coal. These spreads have shrunk or turned negative amid a glut of natural gas and waning electricity demand.

Thursday's weekly reports on power generation and rail transport from the Edison Electric Institute and American Association of Railroads, respectively, will likely add to the gloom. Year-to-date, U.S. electricity generation and the volume of coal transported by rail were off by 5.4% and 7%, respectively, compared with a year ago.

After a brief golden period, coal-fired power has faced a perfect storm since 2008. Looming environmental rules, sharply lower gas prices and a collapse in electricity prices have made dozens of mostly older coal plants uneconomical or not worth upgrading. Coal's share of power generation is at its lowest since 1979. Another 14% of coal-fired capacity might be switched off in favor of natural-gas turbines this year, according to Barclays Capital.....MORE
March 11 
Natural Gas and its Threat to the U.S. Coal Industry (BTU; ACI; ANR; PCX)
Jan 27 
The Economist:"the end of America’s coal era" and "Asian Coal Demand Buoys Peabody; Arch, Kinder Morgan Team On Exports" (BTU; ACI)