Best of luck to the remaining few hopefuls stuck with this mini minor tiddler, hope you have a long term hold in mind. (providing they are still around that is) Here's a few snippets--
Last week Alan Greenspan, the nation's financial elder statesman, acknowledged that the Iraq war "is largely about oil." Big Coal is hoping instability in the Middle East will spook Congress into a $10 billion subsidy for 10 or more coal-to-liquid (CTL) plants, to make diesel fuel from coal instead of from oil. Coal-to-liquid (CTL) is Big Coal's best hope for remaining viable, but the chances of success grow dimmer each passing day.
** The Washington Post reported September 4 that, "In July, Citigroup coal analysts downgraded the stocks of coal companies across the board." "Prophesies of a new wave of coal-fired generation have vaporized, while clean coal technologies... remain a decade away, or more," Citigroup said.
** Coal can readily be turned into diesel fuel or jet fuel (though not into gasoline). Reliable coal-to-liquid (CTL) technology was developed in 1925 by German chemists and it provided half of Nazi German's military fuel during World War II. Unfortunately, the German process uses 5 to 7 gallons of water for each gallon of fuel it produces -- and in the U.S. much of the nation's coal lies beneath semi-arid lands in Montana and Wyoming where water is particularly precious.
Worse yet, the German process (known as Fischer-Tropsch) produces twice as much carbon dioxide per unit of energy, compared to diesel made from petroleum. From a global warming perspective, investing in coal-to-liquid plants could be a serious mistake, and Wall Street knows it. CTL plants are having trouble finding financing.
CTL plants are expensive. The industry estimates that building an 80,000-barrel-per-day coal-to-liquids refinery would cost $7 to $9 billion, compared with less than $2 billion to build a similar-size petroleum refinery. Despite endless lip service to "free markets," Wall Street investors are not going to gamble such large sums without a substantial return guaranteed by the government. Long-term contracts to sell expensive fuel to the Air Force is what the CTL industry has in mind. Presently the Air Force is prohibited from making contracts longer than 5 years -- so Congress would have to extend that to at least 20 years (and then come up with additional subsidies, loan guarantees, and price supports) to kick-start the CTL industry. In Congress, it is Democrats who are most keen to subsidize the CTL industry, the New York Times reports.
It is apparent that, for the first time in years, Big Coal finds itself on the defensive. At this point, their only hope is a massive federal bailout to jump-start a new industry -- coal-to-liquids, or CTL. CTL is a dirty, expensive, -- and above all, unnecessary -- solution to the nation's need for liquid fuels. This seems like a political fight we can win -- if we can just keep the Democrats in Congress from making a pact with the devil.
CXY Price at posting:
0.0¢ Sentiment: Sell Disclosure: Not Held