Will "King Coal" Benefit From Rising Natural Gas Prices?

There's been nowhere for coal companies to hide ever since the price of natural gas fell off a cliff as 2012 approached. Coal companies have been waiting for an inflection point and are hoping it's finally arrived, as natural gas prices close in on $4 per million BTU.

At this price, coal in both the Powder River and Illinois basins should now be economically viable for utilities to use. Peabody Energy is a leading producer in both regions, so any continuation in natural gas' price momentum will add to coal's resurgent competitiveness. 

Why focus solely on the North American market? That's a question Peabody asked itself a while back, and it's clear they couldn't come up with a reason. Record exports from the U.S. in 2012 helped buoy the company's financial performance, and if it can combine a growing Asian market with increased U.S. demand, investors could finally start to be rewarded.

The Fool's Taylor Muckerman has more in the following video.

Exports and low-cost domestic production will determine Peabody's fate
The coal industry in the United States has been in a state of flux since the drop in natural gas prices. Exports are becoming a much bigger part of the domestic coal landscape, and Peabody Energy has deals in place to get its cheaper coal from the Powder River and Illinois basins to India, China, and the EU. For investors looking to capitalize on a rebound in the U.S. coal market, The Motley Fool has written a special new premium report detailing why Peabody Energy is perhaps most worthy of your consideration. Don't miss out on this invaluable resource -- simply click here now to claim your copy today.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 23, 2013, at 10:43 AM, VickieDayton wrote:

    It's not pricing that's killing coal, it's pollution. Even China is starting to develop pollution controls.

  • Report this Comment On March 23, 2013, at 10:54 AM, gasblogger wrote:

    China has increasing natural gas use as a prime element in their new Five Year Plan. Europe is starting to frack, and import more LNG. Coal will be around for a long time, but slowly dying. It will not survive in the USA, thankfully.

    ronwagnersrants . blogspot . com

  • Report this Comment On March 23, 2013, at 11:15 AM, joanofarc13 wrote:

    Throw thee three kings into the ring. Intolerant crudest petroleum petrochemical, the financed economy, and the department of treasury's deepened pockets. Wherein exists the debation fir alternate fuel resources. All of it is anent the current sheriff pontiff emeritus in the gardens of the vaticans. I remnantly recall the days of a German Santa Claus, saint nicholaus, of whom served a wedging piecework of coal coalescening disenfranchising bad peoples goon from the good.

  • Report this Comment On March 23, 2013, at 8:02 PM, jokerjones69 wrote:

    I don't get why gas natural gas prices should be rising when they actually burn off a significant percentage of what gets brought out of the wells because the USA national storage capacity is near peak . If there some how is a sudden shortage then maybe they should stop burning it off ! I doubt I will ever understand corporate greed , any intelligent person would develop some NG power stations near the wells to at least make some cheap electricity from it instead of just burning it off with no gains and then jacking up the prices...

  • Report this Comment On March 25, 2013, at 8:45 AM, Paulson545 wrote:

    The worlds population is growing. People around the world will find out that Solar Panels and Wind Mills won't give them cheap dependable electricity. Coal can be used in a clean way so it's time for the energy rich states to make their case to help reduce OPEC oil. Coal can be turned in Diesel and Transportation Fuel.

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