Peabody Profits While the World Burns
Posted January 28, 2009 in Solving Global Warming
Move over Big Oil, and make room for America's new profiteers: Big Coal. Hey you, Exxon, why not take a breather and let Peabody enjoy the spotlight for a while?
Peabody Energy is the world's largest private-sector coal company. Its coal products fuel approximately 10 percent of all U.S. electricity generation and more than 2 percent of worldwide electricity. (And its industry is largely responsible for fueling global warming.) Unfortunately, the company just announced record revenues for 2008 -- nearly doubling profits from 2007 and setting a new mark of $6.59 billion on coal sales of 256 million tons.
"Our results demonstrate the capability of our operating platform to deliver substantial cash flows," said Executive Vice President and Chief Financial Officer Michael C. Crews. "We are positioned to weather the global economic downturn with nearly $2 billion of available liquidity from our cash balances and lines of credit."
Despite the recent economic downturn that has softened electricity generation, Peabody reported a 2% increase in global coal demand last year, primarily in emerging economies like India and China -- and that trend is expected to continue in 2009. Last year U.S. coal production increased more than 20 million tons, largely to accommodate an increase in U.S. exports to those countries.
While Peabody expects U.S. coal demand to slow down this year due to the recession-driven decline in electricity demand, the company eagerly anticipates strong demand for coal in the long-term:
"The International Energy Agency's World Energy Outlook estimates world primary energy will grow 45 percent between 2006 and 2030 with demand for coal rising more than any other fuel, accounting for over a third of the increase in energy use...Longer term, the U.S. Energy Information Administration expects that coal will power more growth in U.S. electricity generation through 2030 than any other fuel."
How frustrating that one of the financial sector's bright spots in this historically bad economy is the worst form of fuel. Then again, with climate legislation on the horizon and a new era of clean energy on the way, perhaps Big Coal's big paydays will be numbered.
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Comments
Dr. James Singmaster — Jan 28 2009 03:00 PM
I have commented in several places that a "SIN TAX" should be placed on coal sales of 15-20% to be put into a fund to recover lands "SINNED UPON" by the coal industry. For more details, check my comments on Sierra Club's Compass blog that is writing up almost weekly the further "SINS" by the coal industry. Not only will jobs be developed with this "ATONING OF SINS", some speeding up of carbon dioxide trapping will occur. Dr. J. Singmaster
Jim Bullis, Miastrada Co. — Jan 28 2009 07:31 PM
Re:Dr. James Singmaster,
After you're done whupping Peabody for sinning you'll have to get busy on the railroads, the power companies and the rest of us using electricity.
And do not forget to give the same to the electric car folks who are making plans to increase coal usage even further.
Maybe it would be better to try to figure out how to do things differently so after we have all been whupped we might be able to make significant changes.
Some thoughts for the future are at the site linked to my name above.