Coal Futures Burn Bright As World Demand Is Set To Soar

Image by: Duncan Harris
By Steven Morrison II

A funny thing happened on the way to the peak oil crisis: coal. Yes, the dirty black stuff has become a hot commodity on the world market as global behemoths like China drive demand for the power source.

Certainly, coal hit bottom over the summer, causing all kinds of problems for coal mines, many of which operated at a loss during an extended stretch. But no more as prices are rising to feed the growing demand. Coal is back in a big way. Or at least it will be.

In some areas of the globe, coal is absolutely crucial – more than 55% of India’s electricity comes as a result of burning coal. There are actually some kids who would be more than a little excited to find a lump of coal in their stocking this Christmas. In the U.S., however, demand is falling as natural gas continues to make inroads as the go-to fuel source for power plants.

Consequently, America’s excess coal is exported to places like China, who is more than happy to take it off our hands.

The natural gas boom has given coal prices fits over the last couple of years, thanks in no small part to Americans finally seeing the light when it comes to coal’s detrimental effects on the environment. But now, as natural gas prices fall under the weight of a heavy supply side, coal is expected to make a big push in 2013.

Investors have been told to buy-in now and reap the rewards next year. And we have the rapidly expanding economies of China and India to thank for it.

But is coal right for you? It can be if you play it smart. Forecasters point to companies such as Peabody Energy as great potential investments, as the firm and others like it are well-positioned to cash in on positive 2013 coal activity.