Just as it's impossible to discuss jazz music without analyzing the role of John Coltrane, you can no longer fully grasp the overall energy bull market without looking at coal.
As a steady stream of industry experts forecasts major shortfalls in the global supply of coal, the sector has been stoking its furnace lately. Consensus is rapidly growing that we are in the early stages of a multiyear event for coal, and investors have boarded the train in droves. Shares of Massey Energy
Mining equipment maker Joy Global
Offering a context for the coal phenomenon, Leer commented: "The world has never seen 2 billion people go through an industrial revolution, and we're witnessing it right now. It is changing everything...It is certainly changing basic commodity demands and flows."
On Monday, an industry analyst raised predictions for coal prices through 2010, stating that demand will far outstrip supply until at least that time frame. The statement cited rising shipping costs and the potential for a global economic slowdown as potential downside risks to the sector's performance. This Fool sees rising prices for dry bulk shipping supporting coal prices, however, as coal importers are limited by a paltry set of affordable alternatives.
I'm hopeful that Fools heeded previous calls to climb aboard the coal train. Still, despite the very real indications for a long and fruitful ride, I continue to urge careful entry into such a hot sector.