Bentek Energy Forecasts the Trade-Off of Natural Gas Versus Coal
At Bentek Energy's Benposium 2013, Motley Fool Special Ops lead advisor Tom Jacobs asked analyst Eason Jostad the question on every energy investor's mind: At what natural gas prices does a power producer want to run its coal or natural gas plants -- and drive up demand and investing profits in each? Jostad, the reputed second best Rubik's Cube player at Bentek (but the best on this issue), explains that the floor for natural gas is probably $2.50 per thousand cubic feet, where gas beats coal hands down. But it's more complex than that.
All coal is not created equal. Powder River Basin low sulphur coal has an upper hand regardless of pricing, especially with EPA regulations on scrubbers at high sulphur coal burning power plants. So there are three companies -- two coal producers big in the Powder River Basin and one large power producer -- that may be undervalued when coal is unpopular with investors today.
The latter especially was smart because the power producer didn't offload its coal plants. It has an advantage over its competitors because it can move nimbly from coal to gas and back as situations warrant....MORE, including video
