GLG News by Mr. Thomas Shewski, Owner
GLG News is now G+ Insights
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G+ is a community for professionals, academics and entrepreneurs to connect through online discussions and in-person meetings. You will continue to see G+ Insights (formerly GLG News) here as well as on the G+ website, where you can share and discuss the G+ Insights you read.
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Positive Indicators for US Coal
September 21, 2007
Global Coal Demand May Lift U.S. Companies | www.phillyburbs.com
As the article points out China’s demand for coal has impacted the global coal situation. This and other issues discussed below are bullish for US coal producers.
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Coal Transportation Rail Rates Unlikely to Be Restrained Based on Recent STB Rate Case Decisions
September 20, 2007
Captive Shipping is Serious Concern | www.dailyinterlake.com
The long-awaited Surface Transportation Board (STB) rate case decisions for coal transportation to captive BNSF Railway customers demonstrates it is nearly hopeless under the current process to successfully challenge a coal transportation rate.
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Surface Transportation Board Coal Rate Decisions’ Affect on Coal Market
September 20, 2007
Basin Electric Continues Push for Rail Reform | www.wyomingbusinessreport.com
The Surface Transportation Board (STB) decided two Western coal transportation rate cases for the transportation of Powder River Basin coal in favor of the BNSF on September 10, 2007. Besides the STB’s decision being positive for the coal-hauling Class I Railroads, it is also affects coal’s pricing and placement into plants.
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Section 29 Tax Credits and Coal Production
September 20, 2007
Progress Energy Idles Production of Synthetic Fuels | www.earthtimes.org
Section 29 of the U.S. Tax Code provides a tax credit to create synthetic fuel from coal material. The Section 29 tax credits date back to the early-1970s in the energy crisis and were designed to encourage more domestic, rather than foreign, energy sources. In many cases, without these Section 29 tax credits, the coal would be uneconomic and would not be produced and sold. The tax credits begin to phase out as oil prices rises. Also, the credits are scheduled to expire at the end of 2007.
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Some Good News for Constructing New Coal Plants Regarding CO2 Emissions
September 10, 2007
Nevada Panel Won’t Block Coal Plants | www.lasvegassun.com
A few decisions in September 2007 have been good news for building new coal-fired power plant generation. This shows it is not impossible to build a new coal-fired plant because of coal’s carbon dioxide emissions and the belief by some that these emissions contribute to global warming.
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Northern Appalachian Coal to Scrubbed Plants and the Greed of the Western Railroads
September 10, 2007
Consol Energy Reveals Coal Deals With Scrubbed Utilities in Midwest and Southeast | www.tradingmarkets.com
Consol Energy Inc.’s continued placement of Northern Appalachian Coal as discussed in this and other announcements demonstrate the scrubber and high heat and sulfur content thesis the company has been discussing for over two years. The placement of Northern Appalachian coal, rather than Powder River Basin coal, to a Midwest utility demonstrates the greed of the Western Railroads.
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Metallurgical Coking Coal Prices Rising: Affected Producers and Potential on Thermal Coal
September 10, 2007
Spot Coal Prices Picking Up After Two Years of Declining Prices | canadianpress.google.com
As the article points out, metallurgical coking coal prices are on the rise. The commentary section discusses the producers in this space and the potential affect on thermal coal.
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Potential DM&E Build-Out to the PRB: Affect on UP, BNSF, Shippers, and PRB Coal Suppliers
September 7, 2007
Canadian Pacific Acquiring DM&E | www.forbes.com
The Canadian Pacific and its acquisition of the Dakota Minnesota & Eastern (DM&E) along with potential build-out to the Powder River Basin Joint Line are discussed below.
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A Carbon Cap and Trade Program’s Mechanics and Cost on Electricity
September 7, 2007
Carbon Dating | www.forbes.com
The proposals in Congress for a reduction in carbon dioxide (CO2) emissions include what is called a “Cap and Trade” program. Under a Cap and Trade program, the amount of annual CO2 emissions would be capped and an entity would have to have a CO2 allowance for each ton (or metric ton depending on the final wording of the law) emitted during the year.
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August 31, 2007
Joy Global Inc. Announces Fiscal 2007 Third Quarter Operating Results | money.cnn.com
Joy Global in its earnings announcement claims the following: “Although the long-term outlook remains positive, U.S. coal continues to exhibit short-term softness. This is primarily the result of weakening demand for electricity, and compounded by the generator's increased burn of natural gas to enable them to build coal stockpiles.” This is not correct. Natural gas-fired generation is not utilized in increased quantity to enable generators to build coal stockpiles. This is uneconomic and unnecessary. Also, coal consumption is up year-to-date compared to 2006.
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Rail Rates Unlikely to Fall Any Time Soon Even if STB Changes Revenue Adequacy Methodology
August 28, 2007
STB Proposes New Rule for Determining Railroads Cost of Capital | www.logisticsmgmt.com
The Surface Transportation Board (STB) recently issued proposed rulemaking to move from a Discounted Cash Flow (DCF) methodology to a Capital Asset Pricing Model (CAPM) for determining revenue adequacy. Revenue adequacy is the determinant in rate cases brought by shippers--especially coal rate cases—where a Stand Alone Cost (SAC) railroad must be built to compute the prescribed rail rate.
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Coal Plants Produce Useful Byproducts—Fly Ash and Gypsum
August 28, 2007
Plants’ Cleanup May Create Side-Effect | www.baltimoresun.com
Coal plants produce byproducts that have a beneficial use to society. The installation of air pollution controls (APC) may affect this mix of coal combustion byproducts.
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Massey Energy – Current Coal Market Situation Mixed
August 24, 2007
Massey Energy Shares Rise on Upgrade | www.forbes.com
According to the Forbes article, UBS upgraded shares of Massey Energy to “Buy” from “Neutral”. The commentary section describes the current market condition that may affect Massey. At the moment, it is still a mixed picture.
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Implications of Valley Fill Decision on Surface Coal Mines in Appalachian Region
August 23, 2007
Bush Administration Would Ease Legal Limits on Mountaintop Removal Coal Mining | www.ens-newswire.com
The Mountaintop Removal issue has been an ongoing issue for years for Appalachian surface mines. It has been used successfully by interveners to delay, suspend, or block surface mining activities at Appalachian Mines. The issue, to cut it down, revolves around the placement of the overburden (also called spoils, waste, or material) that is removed to uncover the coal. The overburden has to be placed somewhere and it is likely that it will be placed in an area that is a stream or near a stream, even if it only serves as a stream a few times a year (if even that frequently) after a major rainstorm. By extension, one could make the argument—and did make the argument—that the placement of the overburden directly or by proximity affects streams. This was a vehicle by which the interveners would use to delay, suspend, or block the mining activities.
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Thermal Coal Production, Thermal Coal Inventory, Section 29 Coal, and Coking Coal Issues
August 23, 2007
Energy Roundup: B of A Cuts Coal Producers | www.forbes.com
The attached discussion states Bank of America cut its target prices for U.S. coal equities on August 22, 2007. (Yes, not until August 22!!!!). B of A cites coal production and inventory levels for its view. The commentary section discusses current coal production and inventory numbers compared to last year's numbers. It also discusses how Section 29 coal and coking coal could be a potential bright spot.
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August 20, 2007
STB Issues Final Ruling About Fuel Surcharge | www.greatfallstribune.com
The Surface Transportation Board (STB) in January 2007 ruled that fuel surcharges in rail transportation agreements must more accurately reflect the actual cost of the movement and not be a double-dip by including fuel-related costs also in indices utilized to adjust rates. The STB’s decision was made because the fuel surcharge program became an additional profit center for the railroads. The BNSF implemented a mileage-based fuel surcharge in 2005; replacing the percent of base rate fuel surcharge methodology. The Union Pacific implemented its mileage-based fuel surcharge methodology at the end of April 2007; also replacing the percent of base rate fuel surcharge methodology in a vast majority of coal transportation arrangements.
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Coal Exports One Bright Spot in an Otherwise Lackluster Coal Industry
August 20, 2007
U.S. Coal a Better Value to Offshore Buyers Due to Dollar Fall | www.mineweb.net
U.S. coal sales and pricing have been hit the last several months as a result of much higher-than-normal coal inventories at coal-fired power plants. One bright spot has been the increase in U.S coal exports.
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Profit Potential from 2010 Sulfur Dioxide Emissions Allowances
August 20, 2007
Texas Leads List of Dirtiest Power Plants | www.sciam.com
The article discusses the emissions from the top coal plants. Sulfur dioxide is one of the emissions discussed in the article. The article does not focus on how sulfur dioxide emissions from coal plants is approximately half of what they were in 1990 after the Clean Air Act Amendment required the reduction from the nation’s coal plants starting in 1995 for the dirtiest coal plants and in 2000 for the rest of the coal plants. The Analysis Section discusses the current Law, upcoming Rule, and the potential windfall for owners of 2010 SO2 emissions allowances
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August 20, 2007
The Railroad Competition and Service Improvement Act of 2007 | www.washingtonwatch.com
Senate Bill 953 and House of Representatives Bill 2125 are crafted to help address the monopolistic powers of the nation’s Class I Railroads. The Analysis section discusses the major points of the proposed legislation.
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Bingaman-Specter Carbon Reduction Proposal: Value of Credits to Coal Industry
July 23, 2007
Junk Science: Global Warming’s Trillion Dollar Giveaway | www.foxnews.com
Senators Bingaman (D –NM) and Specter (R – PA) introduced the “Low Carbon Economy Act of 2007” on July 11, 2007. It is designed to reduce CO2 emissions. The mechanics of the proposal legislation and the benefit to the coal industry are discussed in the commentary section.
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