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<TITLE>Re: Gas prices pressuring coal</TITLE>
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<FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'>And then, this story on nuclear not happening b/c of true cost: <a href="http://www.economist.com/node/21549936">http://www.economist.com/node/21549936</a><BR>
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.... The squeeze is on!<BR>
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On 3/13/12 1:59 PM, "Jason Holstine" <<a href="jason@amicusgreen.com">jason@amicusgreen.com</a>> wrote:<BR>
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</SPAN></FONT><BLOCKQUOTE><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'>Article in the Financial Times (below) describes how crashing nat gas prices in the US have pushed coal to its lowest share of US electricity load since the 70s, even though coal prices are also down. So now more US coal is being exported—primarily to China so they can make stuff for us. I think this is a classic paradox where the market is making improvements and it could create an opening for further “greening” without people realizing it. Of course, the paradox is that (a) the gas revolution is better in terms of GHG but is from fracking, with other environmental costs/tragedies; (b) that coal is still being burned elsewhere. <BR>
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The opportunity, as I see it, is to leverage the concerns on nat gas and that demand controls (efficiency) balanced with renewables makes for a better future overall...and continuing to pressure oversees manufacturing to clean up their acts (ie. pushing Apple to clean up Foxconn). If coal prices continue to stay low, miners, processors, and traders could even reduce their operations or get out of coal. That will increase demand (and prices) for nat gas and potentially renewables...prioritizing demand-side actions. <BR>
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But the market will potentially lower GHG intensity....there is hope yet.<BR>
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</SPAN><FONT SIZE="4"><SPAN STYLE='font-size:14pt'><B>US rush to gas depresses coal prices<BR>
</B></SPAN></FONT><SPAN STYLE='font-size:11pt'>By Javier Blas in London<BR>
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The share of electricity generated by burning coal in the US has fallen to near a 35-year low as utilities shift to cheaper gas <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html">http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html</a></U></FONT>> on the back of the shale revolution. <BR>
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The shift is reverberating beyond the US as domestic coal miners are forced to export a growing share of their production. It is creating a global glut that is depressing prices in the almost $100bn-a-year thermal coal seaborne market.<BR>
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The drop in coal use is particularly important because the US is the world’s largest electricity market, closely followed by China, and coal-fired power plants are one of the biggest sources of carbon dioxide <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/1f3a6cf2-dab2-11e0-a58b-00144feabdc0.html">http://www.ft.com/cms/s/0/1f3a6cf2-dab2-11e0-a58b-00144feabdc0.html</a></U></FONT>> , a gas that contributes to global warming.<BR>
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Although coal remains the largest source of electricity production in the US, its share fell in December below the 40 per cent mark for the first time since March 1978, according to fresh estimates by the US Department of Energy. <BR>
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The use of coal in US electricity generation peaked in 1985 at almost 60 per cent. <BR>
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“Natural gas prices have dropped significantly this winter, leading the generators in some states, such as Ohio and Pennsylvania, to increase significantly the share of natural gas-fired generation,” the US government said. <BR>
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“Natural gas combined-cycle units operate at higher efficiency than do older, coal-fired units,” it added.<BR>
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US benchmark central Appalachian thermal coal prices fell last week to $58 a tonne, the lowest level in nearly two years. <BR>
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US natural gas prices fell on Monday dropped to $2.3 per million British thermal units, down 85 per cent from an all-time high set in 2005. <BR>
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US natural gas prices have collapsed after companies achieved a large increase in production by tapping so-called shale reservoirs, using a technique called hydraulic fracturing – known as “fracking”.<BR>
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The surge in US coal exports has created a glut that has pushed the cost of the commodity in Rotterdam, the European benchmark, and the Australian port of Newcastle, the Asian benchmark, to the lowest level in 15 months. <BR>
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Low freight rates are helping US thermal coal producers ship their commodity into the European and Asian market, depressing the global seaborne coal market.<BR>
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“Thermal coal is under stress,” said a senior coal trader. “The problem is that the US miners have entered the export market. It is putting a lot of pressure on the price.”<BR>
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Industry executives believe the benchmark annual contracts between coal miners and Japanese utilities <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html">http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html</a></U></FONT>> would be settled this month at $115-$120 a tonne, down 7.5-11.5 per cent from the record high<BR>
of $130 a tonne of last year.<BR>
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The shift in US electricity and the expectation of lower global prices is a setback for the world’s big producers, including Indonesia’s Bumi <<FONT COLOR="#0000FF"><U><a href="http://markets.ft.com/tearsheets/performance.asp?s=uk:BUMI">http://markets.ft.com/tearsheets/performance.asp?s=uk:BUMI</a></U></FONT>> , Xstrata <<FONT COLOR="#0000FF"><U><a href="http://markets.ft.com/tearsheets/performance.asp?s=uk:XTA">http://markets.ft.com/tearsheets/performance.asp?s=uk:XTA</a></U></FONT>> , Anglo American <<FONT COLOR="#0000FF"><U><a href="http://markets.ft.com/tearsheets/performance.asp?s=uk:AAL">http://markets.ft.com/tearsheets/performance.asp?s=uk:AAL</a></U></FONT>> , Rio Tinto <<FONT COLOR="#0000FF"><U><a href="http://markets.ft.com/tearsheets/performance.asp?s=uk:RIO">http://markets.ft.com/tearsheets/performance.asp?s=uk:RIO</a></U></FONT>> and Jakarta-listed Adaro <<FONT COLOR="#0000FF"><U><a href="http://markets.ft.com/tearsheets/performance.asp?s=id:ADRO">http://markets.ft.com/tearsheets/performance.asp?s=id:ADRO</a></U></FONT>> . <BR>
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It is negative, too, for commodities trading houses including Glencore and Noble Group of Hong Kong.<BR>
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Share prices of leading US thermal coal miners, including Consol Energy <<FONT COLOR="#0000FF"><U><a href="http://markets.ft.com/tearsheets/performance.asp?s=us:CNX">http://markets.ft.com/tearsheets/performance.asp?s=us:CNX</a></U></FONT>> , Alpha Natural Resources <<FONT COLOR="#0000FF"><U><a href="http://markets.ft.com/tearsheets/performance.asp?s=us:ANR">http://markets.ft.com/tearsheets/performance.asp?s=us:ANR</a></U></FONT>> and Arch Coal <<FONT COLOR="#0000FF"><U><a href="http://markets.ft.com/tearsheets/performance.asp?s=us:ACI">http://markets.ft.com/tearsheets/performance.asp?s=us:ACI</a></U></FONT>> , have already fallen significantly and some companies have announced production cuts to mitigate the glut. <BR>
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</SPAN><FONT SIZE="5"><SPAN STYLE='font-size:18pt'><B>More<BR>
</B></SPAN></FONT><B><SPAN STYLE='font-size:11pt'>On this story<BR>
</SPAN></B></FONT><UL><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'>Comment US natural gas will hit annual coal contracts <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html">http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html</a></U></FONT>>
</SPAN></FONT><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'> Natural gas prices near 10-year low <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/e1972114-690a-11e1-9931-00144feabdc0.html">http://www.ft.com/cms/s/0/e1972114-690a-11e1-9931-00144feabdc0.html</a></U></FONT>>
</SPAN></FONT><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'>North America US has its eye on oil independence <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/cf1f1eca-19b8-11e1-ba5d-00144feabdc0.html">http://www.ft.com/cms/s/0/cf1f1eca-19b8-11e1-ba5d-00144feabdc0.html</a></U></FONT>>
</SPAN></FONT><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'>In depth Climate change <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/indepth/climatechange">http://www.ft.com/indepth/climatechange</a></U></FONT>> <BR>
</SPAN></FONT></UL><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'><B>On this topic<BR>
</B></SPAN></FONT><UL><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'>Martin Wolf Prepare for a golden age of gas <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/7d298f50-5c85-11e1-8f1f-00144feabdc0.html">http://www.ft.com/cms/s/0/7d298f50-5c85-11e1-8f1f-00144feabdc0.html</a></U></FONT>>
</SPAN></FONT><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'> PetroChina buys Shell shale gas assets <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/7ee7db16-4d86-11e1-bb6c-00144feabdc0.html">http://www.ft.com/cms/s/0/7ee7db16-4d86-11e1-bb6c-00144feabdc0.html</a></U></FONT>> <BR>
</SPAN></FONT></UL><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'><B>IN Commodities<BR>
</B></SPAN></FONT><UL><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'> Man launches computer-driven commodities fund <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/83655a16-6d15-11e1-ab1a-00144feab49a.html">http://www.ft.com/cms/s/0/83655a16-6d15-11e1-ab1a-00144feab49a.html</a></U></FONT>>
</SPAN></FONT><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'> US natural gas prices fall to 10-year low <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/92eac354-6cfc-11e1-a7c7-00144feab49a.html">http://www.ft.com/cms/s/0/92eac354-6cfc-11e1-a7c7-00144feab49a.html</a></U></FONT>>
</SPAN></FONT><LI><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'> India backtracks after lifting cotton ban <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/82e09b9c-6c38-11e1-8c9d-00144feab49a.html">http://www.ft.com/cms/s/0/82e09b9c-6c38-11e1-8c9d-00144feab49a.html</a></U></FONT>> <BR>
</SPAN></FONT></UL><FONT FACE="Calibri, Verdana, Helvetica, Arial"><SPAN STYLE='font-size:11pt'> India unpicks cotton shipments ban <<FONT COLOR="#0000FF"><U><a href="http://www.ft.com/cms/s/0/76954242-6b9e-11e1-ac25-00144feab49a.html">http://www.ft.com/cms/s/0/76954242-6b9e-11e1-ac25-00144feab49a.html</a></U></FONT>> <BR>
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