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Martin Tillier

Martin Tillier

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Policy Change Creates An Opportunity In This Energy Market

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I have said before and I’ll say it again, despite Donald Trump’s best efforts the coal industry in this country is in long-term, probably terminal decline. Those best efforts were to the fore this week, when Trump rolled back Obama era regulations designed to force utilities to move away from the black stuff and towards cleaner power production. For various reasons that may irrelevant when it comes to the long-term future of U.S. coal, but it may be enough to cause a tradeable, short-term bump in the fortunes of some coal stocks.

I would, however, stress the words “short-term”. The fact is that while the Obama regulations didn’t help, just as imposing them was done to please his base, repealing them is more about political optics than anything. The switch to natural gas and renewables is not just a U.S. phenomenon, it is happening all over the world, and it is driven by market dynamics and considerations of the next few decades rather than years. Power companies may welcome more time to switch over their remaining coal powered plants but switch they will. Apart from anything else, in the current tit for tat political environment it is fair to assume that the old regulations will be back when the White House changes hands, whether that is in two years or six.

Still, the temporary relief gives coal companies some breathing space, and there is always the chance that some use that to diversify, either geographically or in other ways. That should be enough to change…




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