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Of all energy-producing commodities, coal has always been the most disliked, primarily because it’s the most putrid as far as fume-producing fuels.
At the same time, coal has provided thousands of jobs for miners in Western Pennsylvania, West Virginia and several other states over the years. But the urgency of energy as climatological cleanliness demands of President Joe Biden’s administration has made its demands more, and its availability less.
Prices for thermal coal — turning hot water into steam to spin turbines and generate electricity — have more than doubled over the past years due to expected shortages. Prices are expected to go even higher as the Biden air-cleansing process reaches its heights. Such high prices are expected to stay at elevated levels for several months, a windfall for companies that held on to coal mines in the face of ever-greater federal pressure.
The situation is becoming even worse in Europe as leading European nations are exerting even more pressure on coal companies than the United States. Analysts say the jump in European coal prices is most surprising because it has taken place alongside a surge in the continent’s growing market for carbon offsets.
“As of end-September, [Europe’s] API2 Rotterdam coal futures have already breached the $230/metric ton threshold, up $80/metric ton in September alone,” notes Oilprice.com.
In theory, high offset prices should demand thermal coal, which produces twice as much per unit of electricity than gas. Instead, consumption has risen because gas and power prices have also jumped. This has made it less profitable to consume gas while boosting the appeal of coal and fuel cycles.
In the long run, though, analysts say the outlook for coal purchase is gloomy. Leaders of Europe’s group of seven summits said coal-fueled power stations were the “biggest source of greenhouse gas criticism.” Therefore, it must eventually be liquidated to keep pace with the climatological efforts.
With no alternative in sight, this may create an even greater problem for Europe as it keeps pace with America’s liquidation process.
Oil’s Quiet Comeback
When President Biden took office in early January 2021, he made it quite certain that he would use his presidential power to crush oil and coal companies as energy producers. At the same time, Biden made it plain that he was a pioneer of clean air, as the world powers would come together to save that natural resource.
By shutting down an oil pipeline from Canada to the U.S. Northwest, the president made sure that “eliminating” oil and coal by cleaning the air would do the job, the sooner the better. Together with renewable energies, Biden hopes to eliminate traditional energy power by the 2040s, well after his expected two-term White House occupation.
While the biennial House/Senate polls may put President Biden’s Washington, D.C., retention in question, more realistic energy advocates are showing unexpected staging power. This is especially proven by the $9.5 billion deal between Conoco Phillips and Royal Dutch Shell. Even the European self-styled advocates of clean air are increasingly concerned by the sudden difficulty in getting oil amidst increasing higher prices.
At the same time, Russia and Saudi Arabia seem to be even greater beneficiaries of increasing oil demand and higher prices, with more to come down the path. Also, the “clean air fancy” has been reduced to “Let Uncle Sam pave the way, then we’ll consider it,” as muttered by the Europeans.
President Biden is not only losing faith from American voters in general, but even the Democrat party is hearing shouts of impeachment. Perhaps there’s a chance that Vice President Kamala Harris would fit that bill. In any case, expect oil prices to keep climbing for the rest of the year.
U.S. Steel Temporarily Surges
If there was any major U.S. manufacturing entity benefitting from President Donald Trump’s factory rebound initiative, it would be the mighty U.S. Steel Corp. Prior to Trump slapping 25-percent tariffs on foreign-made steel, this major example of U.S. manufacturing domination had been on the downhill trek.
Employment numbers in that industry had hit a new low as steel was down to less than 70 percent of its capacity, while foreign steel imports were grabbing off their cheaper imports. President Trump attempted to ensure his second term by pointing to a new 25 percent tax on steel imports.
This renewed the U.S. steel industry big time but infuriated hundreds of thousands of U.S. users, who now had to pay high prices for steel-made products. In fact, such major benefits for U.S. steel gave the Biden campaign a tool that may have made the difference in the 2020 election.
With President Biden facing troubles from all fronts, a return to import tariffs is being considered. Such a move might actually make matters worse than before since Biden’s ebbing voting strength is heaviest in the Pennsylvania, Delaware and West Virginia steel areas. This would make matters much worse for the incoming administration, as even cheaper imports would send inferior carbon steel into the United States.
Already, warnings of remaining tariffs on foreign imports by U.S. steel manufacturers have the embattled president backed into an unpleasant corner. Even U.S. manufacturers of steel-made products are concerned that immediate removal of foreign tariffs would cause shortages; they would not be ready to fill the new void as European producers would not be ready.
Even top officials in the Biden administration are concerned that tariff removal prior to the upcoming biennial voting next summer would hand a solid victory to the GOP. It’s a case of “Damned if you do, and damned if you don’t.”