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What Killed The Oil Price Rally?

What Killed The Oil Price Rally?

A bearish report from the…

Coal Wins Minor Battle with EPA, but Still Loses to Natural Gas

The Environmental Protection Agency (EPA) has lost a major legal battle with major power companies over the timeframe and extent of coal-pollution regulations, but it will do little to stay the decline of coal in the face of the natural gas revolution.

On Tuesday, the US Court of Appeals overturned an EPA cross-state pollution rule, saying that it stepped on the legal toes of states, which are meant to set their own air-pollution regulations. The court also said the EPA’s caps on sulfur dioxide and nitrogen oxide emissions from power plants in 28 US states, mostly in the East and Texas, were too low. 

Even by the EPA’s estimates, the pollution rulings would cost some $800 million annually to facilitate, beginning in 2014.

A victory it is—especially for the major players like Edison and the American Electric Power Co.—but it will do little to change the fact that coal-fired electricity generation is no longer a viable competitor in the face of cheap natural gas. 

Coal stocks have experienced significant losses this year, though rallied somewhat on the Tuesday court ruling. At the same time, natural gas futures fell more than 3% with the court ruling, but rebounded right away, with no actual losses.

By. Joao Peixe of Oilprice.com


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