Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

American Electric Power Company, Inc. (AEP), The Southern Company (SO), Peabody Energy Corporation (BTU): Is Coal About to Get Choked Off After All?

Page 1 of 2

The day after I laid out my case for why the canary in the coal mine isn’t dead yet, The Wall Street Journal published a story indicating the Obama administration is still actively hunting the bird down to kill it, while a separate story from the Associated Press says China is trying to cage it, too.

Source: Getty Images

The EPA is poised to promulgate tough, sweeping new regulations that will effectively stamp out any construction of a coal-fired powered plant in the U.S. Although it allows for them to be built if they include greenhouse gas capture technology, the equipment is so expensive as to make it prohibitive and hasn’t been proven at commercial scale, which effectively kills off the construction of any plants. A second phase of the program that may finally bury the industry — or bankrupt it, as Obama promised when he first ran for president — will kick in next year when rules covering existing plants will come into play.

The Southern Company (NYSE:SO)China, for its part, is trying to control air pollution around its major cities and will ban new coal-fired plants around Beijing, Shanghai, and Guangzhou with an eye toward reducing the country’s dependence on coal to around 65% by 2017. Currently coal accounts for around 68% of China’s energy needs and it would like non-fossil fuels to grow from 9% to 13% of its energy production.

Here at home, utility operator American Electric Power Company, Inc. (NYSE:AEP) would be particularly threatened by the new EPA rules as coal accounted for 71% of its fuel source, even though it’s down from 82% two year ago. The Southern Company (NYSE:SO) has been much more proactive, reducing its reliance upon coal from 58% in 2010 to 38% last year, while bumping up gas from 25% to 42% in 2012.

Even so, I’m not willing to sign the coal industry’s death certificate yet. It may look as if it’s on the brink of disaster, but the EPA previously said it was unlikely any coal-fired plants would be built between now and 2020 anyway. Part of the rationale is the secular decline in natural gas prices brought on by massive amounts of production through innovative drilling techniques such as horizontal drilling and hydraulic fracturing, which the administration is also trying to stymie. So a lot of the ruckus has been already factored into coal stock prices.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!