"The Coal Time Bomb Is Ticking"
King Coal’s front groups — Americans for Balanced Energy Choices (ABEC) and the American Coalition for Clean Coal Electricity (ACCCE) — are continuing to spread misleading propaganda about its dirty and expensive fuel:
Coal is affordable and reliable. Electricity from coal costs about half as much as electricity from other energy sources. In fact, twenty-two of the nation’s 25 lowest-cost power plants use coal to generate electricity. And the price of coal has remained stable over the years, especially when compared to other energy sources. The cost of electricity from coal has risen only four percent since 1979, while costs for energy from oil have risen over 50 percent and the costs for energy from gas have increased more than 200 percent during the same time period.
Unfortunately, it is an dirty illusion that coal is our “cheapest power source” — even if the terrible costs of its pollution are ignored. A time bomb of a price explosion is ticking, with massive increases in the cost of coal-powered electricity to come, year after year after year. In the coal spot markets, high-quality Appalachian coal has nearly tripled in price in the past year:
|Average Weekly Coal Commodity Spot Prices
(Dollars per Short Ton)
Business Week Ended August 8, 2008
These price increases in the spot market are driven by surging international demand, the collapse of the dollar, fuel surcharges in transporting coal, investor speculation, and climate-change-related “wild weather” that played havoc with Australian exports of coal. These seemingly disparate influences are are all tightly interlocked by our global dependence on fossil fuels.
Because coal contracts are purchased on a multi-year basis, changes in the market can take years to hit the consumer. But the first signs of this massive price shock are starting to appear. Coal-country utility American Electric Power, a backer of ACCCE, stated on Thursday that it “must raise electricity rates 45 percent for its nearly 1.5 million customers in Ohio over the next three years, to cover soaring coal prices and the cost of modernizing its systems to keep them reliable.” Joe Hamrock, AEP Ohio president and chief operating officer declared:
The fact is that coal has doubled in cost in the last year alone, dramatically affecting AEP Ohio’s costs.
The coal companies who also fund ACCCE — when they talk to investors, not consumers — are gleeful about how the high prices of coal will guarantee “significant earnings increases for many years to come.” As Gregory H. Boyce, the Chairman and Chief Executive Officer of Peabody Energy, the world’s largest coal company, explained when he announced record second-quarter profits last month:
The structural changes driving demand much higher than supply, across all coal markets, look to be very long-lived. We are just beginning to benefit from the repricing of legacy coal supply contracts at higher levels, which could drive significant earnings increases for many years to come.”
As it revels in record profit, King Coal is bankrolling a fossil-dependent future of energy poverty and pollution: Peabody Energy is also the top corporate funder of Newt Gingrich’s “Drill Here, Drill Now” 527 corporation, American Solutions for Winning the Future.