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With a few words, Romney causes a coal rally

"I like coal," Mitt Romney during the presidential debate.

The beleaguered industry got a lift from the Republican presidential candidate, and it needed it.

Romney's endorsement of coal as an essential ingredient to the country's energy portfolio caused company stocks to bump up. Arch Coal, Alpha Natural Resources, Consol, Peabody Energy and Walter Energy all saw increases of at least 4 percent the day after the debate.

"It's amazing what 15 words about coal in a presidential debate can do for stocks," Michael Dudas of Sterne Agee told Reuters. "These stocks have been volatile, but you can't discount what a man running for president said about coal. Call it the Romney rally."

Coal claims President Obama and his EPA have waged a "war on coal" over the last four years. One can disagree with the analogy, but it's clear the president's strategy plays favorites - green energy and natural gas over coal.

The drop in natural gas prices, slack demand and the toughened regulatory approach by the EPA are the trifecta that have triggered industry layoffs and pessimism about the future.

Economists at The Brattle Group reported earlier that market conditions and the regulatory environment will cause about 30,000 megawatts (or 10 percent of coal generating capacity) to shut down between 2012 and 2016.

However, Brattle has now updated its findings based on recent market conditions and "ongoing environmental policy uncertainty."

The research group came up with two scenarios - one based on lenient environmental control technology and another based on strict policies.

Even under a more lenient approach by the EPA, the reduction of coal generating capacity will be twice as large as previously believed, about 59,000 megawatts.

But if the EPA takes a stricter approach, 77,000 megawatts of generation capacity will likely disappear rather than retrofit to meet tougher environmental standards.

The shortsighted view - the one held by the anti-coal crowd - is that a dirtier energy source will be replaced by cheaper natural gas and alternatives.

But natural gas prices, which are now low, aren't going to stay there.

Natural gas prices are highly volatile. As demand increases, prices will naturally rise.

Additionally, domestic natural gas producers are looking to expand exports.

The Wall Street Journal reports that, "Many big consumers of natural gas are worried currently proposed projects, which could export more than a third of daily production in the continental U.S., would raise natural gas prices," reported the Wall Street Journal.

A thriving economy depends on massive amounts of energy that are relatively cheap and readily available. A true all-of-the-above approach is best because it takes advantage of the country's remarkable bounty of coal and natural gas.

The Obama administration and its EPA are openly hostile to the country's primary energy source of coal, while simultaneously propping up questionable green alternatives with taxpayer dollars.

No wonder coal was buoyed by a few kind words from Romney.

Kercheval is host of TalkLine, broadcast by the MetroNews Statewide Radio Network from 10 a.m. to noon Monday through Friday. The show can be heard locally on WCHS 580 AM.


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