Cheap natural gas has pressured the coal industry, along with related exchange traded funds, in the second quarter, but President Barack Obama’s so-called war on coal could smother any flickering embers.
The Market Vectors Coal ETF (NYSEArca: KOL) dropped 5.7% over the past week and is down 23.6% since the start of April. KOL is comprised of global companies engaged in the coal industry. [Walter’s Woes Plague Coal ETF]
According to Luke Popovich, a spokesman for the National Mining Association, U.S. demand for coal has declined due to the relatively low natural gas prices and electricity usage – natural gas is seen as a cheaper alternative fuel for power generation, reports Wendy Koch for USA Today.
On Tuesday, Obama unveiled a new climate change strategy to limit pollution from existing coal-fired power plants, the largest source of carbon emissions in the U.S., reports Ashley Killough for CNN.
Specifically, the president wants the Environmental Protection Agency to establish a carbon pollution standard for plants that are already active, arguing that the benefits of diminished greenhouse gases outweighs the costs for implementing new rules.
However, the coal industry is not as stoked.
“The impact could be economic havoc,” Popovich said in the CNN article.
“The president’s announcement yesterday of essentially a national energy tax and the continuation of the war on coal will only make matters worse, putting thousands and thousands of Americans out of work; increasing the cost of electricity, especially in a state like mine, Ohio, where about 95 percent of our electricity comes from burning coal,” House Speaker John a. Boehner (R-Ohio), said in a news conference, reports Glenn Kessler for Washington Post.
Overseas, coal demand is rising, even in developed countries like Germany and Japan, which are cutting back on nuclear power.
Market Vectors Coal ETF
For more information on the coal industry, visit our coal category.
Max Chen contributed to this article.