A Breathtaking Opportunity The Rude Awakening
Reno, Nevada
Tuesday, January 23, 2007 - Getting all choked up in China,
- Energy trends that will take your breath away and…
- 140,000 "have nots" consider becoming "haves"
Eric Fry, reporting from Laguna Beach, California… In the much-maligned commodity sector, few commodities have been maligned as much as coal. The price of coal has been tumbling for almost a year. Ever since topping out around $64 a ton last March, the spot price of "Big Sandy Barge" coal has fallen almost 40%. Accordingly, the share prices of companies that haul this unglamorous fuel out of the ground have also tumbled. As the nearby chart illustrates, the price of coal has been falling even more sharply that plummeting price of crude oil. 
So despite the big bull market that has inflated the price of nearly every commodity on the planet, the price of coal sits right where it was three years ago. Perhaps this is just as it should be. Coal remains plentiful…and even in the most modern of power plants, coal is not exactly the environment's best friend. Wouldn't we all prefer to re-charge our Priuses and our iPods with pristine energy sources? And wouldn't "Hotel California" always sound just a little bit better if we knew that our iPod had been charged by sunbeams that had danced upon a solar panel somewhere? Unfortunately, that's not the real world…at least not yet. Solar and wind power sources contribute less than one percent of America's total energy consumption. But coal still contributes more than half! This inconvenient fact is only one part of a global demand scenario that insures a major role for coal in the world's energy future - like it or not. Of course, long-term demand trends wield very little influence over coal's short-term price trend. But Justice Litle, co-editor of Outstanding Investments, suspects that coal and coal stocks have suffered enough abuse for the time being. Justice hesitates to "call the bottom" in coal, but he does not hesitate to declare that coal has become too cheap…at least in relation to crude oil and other competing energy sources. ----------Special----------- 100% Accuracy… With Average Gains of 100%! Your Chance to turn $5,000 Into $1 Million With the Hot Streak of the Decade If you were one of this hotshot analyst's loyal readers in the last couple of years, you would have had a chance to make money on every single one of his recommendations. And not just small gains, either - the average return was 100%. Catch this streak while it's still hot - and learn how quickly you could turn $5,000 into $1 million. ---------------------------- A Breathtaking Opportunity
By Justice Litle
As far as the public is concerned, coal is the Rodney Dangerfield of fossil fuels: It gets no respect. Coal is dirty, lumpy and unremarkable. It is a game show booby prize, a punishment for bad children at Christmas. In terms of our daily lives, coal is almost wholly out of sight and out of mind. Yet the entire Industrial Revolution was founded on coal. (The steam engine gets all the press… but think of the steam engine as the Lone Ranger and coal as Tonto. Without his trusty companion, the Lone Ranger would never have gotten any glory.)
Oil may hog the limelight these days, but coal has not gone dormant. If anything, today's world relies on coal more than ever before. According to recent figures from the World Coal Institute, 24.4% of primary energy consumption worldwide comes from coal. Coal's share of worldwide electricity generation is 40.1%. In the United States, more than half the country's electricity comes from coal; in China and Australia, the totals approach 80%; in Poland and South Africa, the totals are above 90%. For perspective on how much physical coal the world eats up, consider this: According to the science Web site, howstuffworks.com, the electricity required to power a single 100-watt light bulb, if left on 24 hours a day, would consume 714 pounds of coal over the course of a year. Most of us do not leave our lights on round the clock, but we tend to have many going simultaneously. (Never mind all the other doodads and gizmos around the house.) As it turns out, the world's heavy coal users - folks like you and me - don't even know they have a habit. That ignorance is a luxury, provided by the blessings of modern technology. For the majority of its history, coal has been a particularly nasty source of urban pollution. Blackened lungs and reddened eyes go all the way back to the High Middle Ages. In the year 1285, King Edward I - commonly known as Edward the Longshanks - had two great battles on his hands. In Scotland, there was William Wallace; at home in London, there was coal. The King tried, and failed, to curtail London's use of coal on public health grounds. Harsh bans and brutal penalties were put in place, but acrid smoke continued to foul the air. With the city growing rapidly and the forests in retreat, London's pressing need for fuel and heat trumped all else. Some 500 years after Longshanks, the potent combination of coal and steam had transformed England and kicked off the Industrial Revolution. By the 1850s, Britain was officially urbanized, with 51% of the population living in cities. And what living hells those early industrial cities were, Manchester chief among them: sky black with smoke, ground black with soot, the very air choked with dust. Scores of Manchester children were struck with rickets, a vitamin deficiency malady that softens the bones due to lack of exposure to sunlight. Fifty-seven percent died before the age of five. Those children who survived typically toiled the rest of their lives away in the factories and the mines. All that misery is gone now (in the West, at any rate). Modern coal-fired power plants are paragons of efficiency and discretion. Leviathan jets of flame 10 stories high consume as much as 500 tons of coal per hour, hidden in the confines of gigantic boilers that convert heat into steam and steam into electricity. It all happens behind closed doors, on guarded grounds outside city limits. We no longer see, smell or taste the coal. We only flip on the light switch. Yet, for all the cleaning up the coal industry has done, we are still paying a heavy toll for coal use. Western coal plants no longer belch black smoke; their emissions have been vigorously scrubbed and filtered, in accordance with the law. But these scrubbed emissions still make a disturbing contribution to the likes of acid rain and other "slow-fuse" environmental concerns like rising carbon dioxide emissions. And in less fastidious jurisdictions - like the entire country of China - "unscrubbed" emissions from coal-fired plants have produced some of the most toxic cities in the world. Many Chinese cities resemble the Manchester, England of old. The New York Times reports that China uses more coal than the United States, Japan and the European Union combined. China's plants are older, less efficient and produce more toxic emissions than their regulated Western counterparts. China's massive pollution clouds have been known to travel the breadth of oceans, clogging up filters as far away as Lake Tahoe. With India following in China's sooty footsteps, a global pollution epidemic may be in the works. So should we feel gratitude or disgust toward Old King Coal? It's hard not to feel a mixture of both. On the whole, coal has been very good to us. As a driver of the Industrial Revolution, however hellish initial conditions were, coal brought about the rise of manufacturing and the high standards of living the West now enjoys. As an ongoing source of cheap power, coal now gives China and India a chance at continued rapid growth. But none of this is without cost. China possesses seven of the world's ten most polluted cities, thanks largely to the country's heavy reliance on coal-fired electricity. Even so, the world will not be going off coal anytime soon. Energy economics tilt heavily in coal's favor, especially in the developing world. New coal plants, still being built at a rapid clip, have operating life spans of half a century or more. It wouldn't make sense to mothball them prematurely. Countless existing plants have decades left to go. Last, but certainly not least, countries like China and India also have to deal with an emerging middle class and the rise of consumption-based lifestyles. They may need all the energy sources they can get their hands on - both dirty and clean - to keep up with demand in future years. Meanwhile, coal-to-liquids technologies, as well as various "clean coal" technologies, will continue to promote demand for coal throughout the Developed World. Given all these demand factors, $40-a-ton coal seems way too cheap. 
It is interesting to note that the price of coal, relative to the price of crude oil, has slumped to its lowest level in a decade. This relationship does not necessarily imply that coal prices are approaching an important bottom, but it does suggest the possibility. Long-term investors take note. Eric's Note: Justice Litle is co-editor of Outstanding Investments, a $49 investment letter that should probably cost a lot more money. At the end of 2006, Outstanding Investments was ranked as the top-performing newsletter of the prior five years by the prestigious Hulbert Financial Digest. For the year just passed, Outstanding Investments ranked 5th by Hulbert, with an average return on recommended stocks of 37.2% (through November 30, 2006) - or more than double the return of the Dow Jones Industrial Average over the same timeframe. Justice is one of those rare investors who does not allow investment prejudices or preconceptions to cloud his judgment. If he thinks a specific coal company is about to turn a corner, he will tell you so. But if he sees a specific opportunity in the solar power sector, he will tell you that also. This disciplined flexibility is one reason why Outstanding Investments' long list of winning recommendations features a diverse selection of natural resource companies - from those that mine gold and uranium to those that convert municipal waste into energy. About 30,000 Rude Awakening readers have already subscribed to Outstanding Investments, which means that about 140,000 Rude Awakening readers have not. If you are one of the "have nots" who might like to become a "have," click on the link below… Justice Litle's Oustanding Investments -----------The Car of the Future------------- America's Top-Ranked Financial Newsletter Says: The Petroleum-Free Car of the Future WON'T Run on Hydrogen or Ethanol Whatever you do, don't follow the Wall Street crowd into the hydrogen fuel cell myth. Forget ethanol, too. Getting rich from the end of cheap oil means investing in the REAL solution to America's oil addiction. Buy in now -- before investors realize the mistake they're making and come flooding in. Readers who followed similar advice had a chance to rake in average gains of 64% last year…and 62% the year before that. But even bigger profits could lie ahead. | 
