I normally don't care for Motley Fool but once in awhile they have a good article. Their article on coal today was particularly good.
Arch Coal CEO John Eaves recently noted that Powder River Basin coal stockpiles were so low that, "Some of our customers have raised concerns about potential stockpile shortages..." That's because of weather driven demand, but, "Even more intriguing is what is happening in the natural gas market."
It's worth paying attention when Arch Coal's CEO finds something about the gas market interesting because natural gas is the primary competitor to coal in the utility space. Eaves notes that, "So far this winter, 1600 BCF has been drawn from natural gas storage. This represents a withdrawal rate 45% above the five-year average..." and, "...we share our customers concerns about the potential lack of grid reliability and fuel diversity..."
Utilities throughout the country have been building up their natural gas fleets.
Industry giant Duke Energy, for example, is working to increase its reliance on natural gas to nearly a quarter of its fuel mix by next year. That's up from a paltry 5% in 2005. Natural gas use at Southern Company has been increasing, too, with CEO Thomas Fanning noting that his company is the, "...second or third largest gas consumer in the United States."
This pair of giants isn't alone, but Gregory Boyce, CEO of Peabody Energy, echoed Arch Coal's concerns during his company's full-year 2013 conference call, "...it's our view that we're going to see some serious review of previous decisions as to the exact time frame when some of these [coal] plants are going to be retired..." That's because, "...we're seeing more and more evidence that people are concerned about the ability to supply power particularly in swing periods, whether it be the summer or the winter."Maybe that plan to kill the US coal industry was not all that clever. Sort of reminds me of Harvard's "best and brightest" that dragged us into the Vietnam conflict.