Don't let it get away!
Help yourself with the Fool's FREE and easy new watchlist service today.
All this week, the Energy Information Administration has released updated data on U.S. energy trade, and in its latest tranche, EIA data shows that the dollar value of U.S. coal exports has tripled since 2005, giving the U.S. a billion dollar surplus in coal trade.
Coal is still a minor slice of U.S. energy trade, which is dominated by oil. Coal only accounts for 5%. Nevertheless, coal trade has skyrocketed in recent years. The U.S. exported 50 million short tons in 2005, but that number jumped to 126 million short tons in 2012. This is largely due a decreased reliance on coal within the U.S., at the same time that global demand for coal is rapidly increasing, largely led by China. A slowdown in domestic demand has obviated the need for coal imports, which have declined. The U.S. still imports coal, with about three-quarters coming from Colombia.
With natural gas and renewable energy eating into coal's market share in the U.S., coal producers have had to look abroad. About 50% of those exports go to Europe, with 26% to Asia, 11% to North America, and 10% to South America. Coal producers are hoping to continue to capitalize on growing global demand by building export terminals on the West Coast. This would allow coal from the Powder River Basin in Wyoming and Montana – the lowest coast coal in the U.S. – to reach China and India. But those proposals have run into stiff local opposition as well as financial challenges.
Still, as EIA notes, U.S. coal producers hoping to export to Asia have to compete with other major global coal producers, notably Australia and Indonesia. U.S. coal exports to China, even if West Coast ports move forward, would still only be a drop in the bucket compared to those two suppliers.
What does Buffett see in this energy company?
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!