U.S. Shale Means Cheap Coal for British Economy

British Prime Minister David Cameron said Thursday his government would do what it could to help the country's largest coal producer, U.K. Coal, stay afloat.

Apr 4, 2014 at 9:31AM

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British Prime Minister David Cameron said Thursday his government would do what it could to help the country's largest coal producer, U.K. Coal, stay afloat. It's been struggling in part because the U.S. shale boom is causing coal companies to export more to overseas markets.

Two years ago, U.K. Coal was producing more than 30 percent of the British coal supply. It started having financial problems last year and this week said it may be forced to close two of the last three deep pit mines in the country.

Cameron told the BBC "there are things we can do" to help save the struggling coal producer.

U.K. Coal now provides about 8 percent of all the coal consumed in the United Kingdom. It said it's been struggling to compete against cheaper imported coal and most of that was coming from the United States, where the shale natural gas boom has forced U.S. coal producers to look overseas for new energy markets.

The U.S. Energy Information Administration said total natural gas imports last year were 8 percent less than in 2012 and at their lowest level since 1995. The shale boom in the United States means more self-reliance on domestic gas and coal producers are feeling the pressure.

While coal exports to Europe as a whole declined 8.5 percent from 2012 to 2013, EIA said U.S. coal exports to the United Kingdom increased 11.8 percent. The increase comes even though total U.S. coal production during the fourth quarter declined 4.2 percent year-on-year and U.S. coal exports fell 0.7 percent from fourth quarter 2012.

Last year, British Energy and Climate Change Secretary Ed Davey said it was "completely illogical" for major economies to keep supporting their economies with coal-fired power plants.

"It undermines global efforts to prevent dangerous climate change and stores up a future financial time bomb for those countries who would have to undo their reliance on coal-fired generation in the decades ahead, as we are having to do today," he said.

The British Department of Energy and Climate Change said primary energy production declined 6.7 percent year-on-year because of a fall in fossil fuel extracts. Coal output for last year was down 24 percent because of mine closures. Though Davey said it was time to move away from coal, DECC said coal accounted for 40.7 percent of the electricity supplied in 2013. The contribution of coal to the British energy mix, the department said, "remains high."

The Intergovernmental Panel on Climate Change says the coal industry is the most carbon-intensive of the fossil fuels it blames on spoiling the environment. While cleaner-burning gas is abundant, the U.S. shale boom may be creating secondary problems in the global marketplace.

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Written by Daniel J. Graeber at Oilprice.com.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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