Top Friday Stories -Part 2
We discussed this on the natural gas side Wednesday (
May 7: Roundup for the Day)
And don't look now, but in a World of Shortages even natural gas could be causing us some issues NEXT winter says Goldman Sachs. (remember, global competition for resources - if we won't pay, someone else i.e. a government with cash - will) But don't look now, it's going to hit whether your utility uses coal or natural gas... this is sort of like investing in oil stocks 3-4 years ago - to offset the prices your paying in real life, you need to make money on the stocks in your investments... I think there is going to be serious sticker shock next winter; and if you think this next winter will be bad just wait for the one after that - the increased costs will take time to filter through the system. As I say almost daily - the real inflation hitting this country is going to shock people - especially those who dictate our national policies on fictional government reports. We are going to see some major upheavel as people become very angry as things they consider necessities begin to get out of reach for those on the lower end and consume a much larger % of income on the middle end
USAToday: Coal Price Hikes Boost Electric Rates, More Pain Coming
- Consumers struggling with high gas prices, rising food costs and falling home values have something new to worry about: Sharply rising electricity rates due to a surge in coal prices over the past year.
- There is an abundance of coal in the United States, but like other commodities its price is increasingly dependent on events elsewhere in the world. Snowstorms this winter cut coal production in China and heavy rain flooded mines in Australia — the world's largest coal exporter. Meanwhile, demand for coal to generate electricity and make steel is rising almost everywhere, especially in fast-growing China and India.
- Central Appalachian coal, a benchmark grade that's widely used by power plants, has jumped from around $40 a ton in early 2007 to almost $90 a ton now. Coal from the Powder River Basin in Wyoming and Montana, which has about three-quarters the heat content of Central Appalachian coal, jumped from less than $10 a ton to almost $15 a ton over the same time period. Utilities must burn more Powder River Basin coal to generate an equivalent amount of energy, and it must travel east by rail, which adds significantly to its final cost. Utilities such as American Electric Power, for instance, mostly burn Appalachian coal in their eastern plants, but rely on cheaper Powder River Basin coal in the west.
- American Electric is able to limit its rate increase in West Virginia to 15% — even though coal prices have doubled recently — because, like most other utilities, it buys coal via a portfolio of hundreds of contracts that let it lock in prices. But as contracts expire, they must then be re-negotiated at rising rates. (so unless we have a dramatic drop in coal prices, we are only passing along a fraction of the coal price increases at this time - let's see how government steps into the "free market" and tells utilities they cannot raise prices to 'market levels' - I'm sure that will come in "free market" America)
- That's bad news for consumers like Rodrigo Goines, 36, a disabled Lexington, Ky., resident whose government assistance checks barely cover his meager living expenses now. "I'm not going to be able to afford it," Goines said.
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