This year's global demand for coal has been nothing but stunning and is a warning to proponents of the green energy transition. The modern world is dealing with a shortage of fossil fuel supplies and their increasingly soaring prices as renewable generation becomes unreliable ahead of the Northern Hemisphere winter. Despite President Biden's push for climate change policies that could transition the power grid to 100% renewables by 2035, he has done something former President Trump could only dream about: "Make Coal Great Again."
The latest signs coal is roaring back like never before despite Biden and the assault by the green lobby spearheaded by hapless puppet Greta Thunberg to kill fossil fuels is the Monday announcement by Peabody Energy Corp., the largest private-sector coal company in the world, expects increased demand for coal that will triple earnings for first seven months compared with the same period last year.
"The preliminary financial results we reported today continue to demonstrate the disciplined approach we are taking to control costs, expand margins and reduce debt. Coal sales to customers were in excess of $900 million, the highest level in seven quarters. We remain optimistic about the future given strong coal pricing and global demand fundamentals," said Peabody President and CEO Jim Grech.
Peabody Energy's shares jumped 16.5% to $18.55, reaching highs not seen since September. Around $18.73, a 38.2% Fibonacci retracement level sits. A break above that level could ignite more upside momentum.
All of this optimism about coal is happening under a Biden administration that is supposedly trying to kill the dirtiest fossil fuel. However, U.S. power plants are on course to burn 23% more coal this year, the first increase since 2013. The reason is that high natural gas prices make it uneconomic to produce electricity, and coal will help boost margins. Currently, 25% of all U.S. electricity produced is derived from coal-fired plants, up ten percentage points since the beginning of COVID.
"The markets have spoken," Rich Nolan, the National Mining Association chief executive officer, recently told Bloomberg. "We're seeing the essential nature of coal come roaring back." The Energy Information Administration forecasts U.S. utilities are estimated to burn 536.9 million short tons of thermal coal, up from 436.5 million in 2020.
Ernie Thrasher, CEO of Xcoal Energy & Resources, the largest U.S. exporter of fuel, said demand for coal will remain robust well into 2022. Weeks ago, he warned about domestic supply constraints and power companies already "discussing possible grid blackouts this winter."