Commodities & Metals

That Was Fast -- Coal Goes Back to the Furnace

The Supreme Court ruling against the Environmental Protection Agency (EPA) whereby the EPA did not consider costs was supposed to be a lifeline for the business of fossil fuels. Or was it? After looking at the data on Monday, 24/7 Wall St. determined that the ruling just wasn’t one that was so big that it would save the coal companies.

The rules the Supreme Court tossed out Monday morning took effect earlier this year after being adopted by the EPA in 2012. In a majority opinion written by Justice Antonin Scalia, the court said: “EPA strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants.”

A further explanation shows why this is just not enough for the coal companies.

The major coal companies saw their shares rise on Monday, and that was on a day when the rest of the market rallied. Then when the market rallied on Tuesday, there was no continuation in the major coal stocks. In fact, all the gains were more or less given back.

Peabody Energy Corp. (NYSE: BTU) went from $2.20 to $2.40 on Monday, only to close down 12.75% at $2.19 on Tuesday. Peabody has a 52-week trading range of $1.92 to $16.71.

Arch Coal Inc. (NYSE: ACI) went from roughly $0.40 to $0.45 briefly on Monday, but shares closed down 19% at $0.34 on Tuesday. Arch Coal has a 52-week range of $0.32 to $3.73.

CONSOL Energy Inc. (NYSE: CNX) briefly tried to rally on Monday, but shares did not sustain the rally even then. CONSOL shares closed at $22.03 on Monday and closed down 1.3% at $21.74 on Tuesday. The stock has a 52-week range of $21.44 to $46.61.

Westmoreland Coal Co. (NASDAQ: WLB) rose from $21 to as high as $22 on Tuesday, and its shares were down 4% at $20.78 on Tuesday. Its 52-week range is $20.46 to $45.19.

The Market Vectors Coal ETF (NYSEMKT: KOL) hardly budged higher on Monday, due to the large international holdings within the exchange traded fund. Still, it fell by 1% to $11.36 on Tuesday, in a 52-week range of $11.31 to $19.75. Again, there are just too many foreign companies for this ETF to have gotten the “pull up factor” with U.S. coal companies.

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