1. demand for coal falls drastically around world, especially US due to great recession, shift to extremely cheap natural gas, reduced mfg and lesser demand for electricity; 2. supply of coal slowly falls to meet reduced demand; e.g., coal mines and new coal projects close down around world; coal mining in UK is virtually now dead; 3. demand for electricity starts to rise as world economy picks up, pop growth continues, rising middle classes in Asia and So Am; price of electricity starts to rise dramatically around world as nuclear plants close and new projects stay on hold; cheap natural gas gets utilized by growing manifacturing that uses nat gas as feedstock; LNG goes to export; and possibly less supply of natgas than thought in U.S. (ala Arthur Berman), thus, natgas rises fast; 4. demand for coal starts to rise and price follows; 5. supply of coal tries to meet increasing demand but it's a slow process to get mines back in production; 6. supply constraints for coal persist for a few years; meantime, wildly rising electricity w/ limited nat gas and limited nuclear to pick up slack; 7. by 2015 coal will begin a strong uptrend in prices and the surviving coal companies will be extremely profitable. The Plan: accumulate sharesof ACI for the next two years and than hold for 30 per share by 2016-17
Good synopsis. However, I don't think you will have to wait until 2016-17.
Natural gas is dead. We are not drilling enough new wells to keep ng production stable. Natural gas production is being kept stable by drilled but unconnected wells being put in service. Sooner or later we will run out of drilled but unconnected wells. Thereafter, ng production falls.
NG rig count will have a meaningful rise only when the price received for natural gas reaches the cost of producing natural gas. Somewhere between $5-$8
Within the year we will be approaching historical ratios of coal to natural gas for power production i.e. 45-50% of power production from coal and 20-25% from natural gas.
In the past ng from conventional wells allowed ng to be competitive with coal. No more. Conventional wells are played out and have had declining production for the past 30 years. Fracking is the last gasp for natural gas. Unfortuneately, fracking is expensive and eventually will be saddled with regulatory scrutiny which will make ng even more expensive.
From a political view, if energy rich states start switching from blue to red,anti energy democrats to energy friendly republicans , we may see a demand for the radical EPA to back off or face severe budget cuts. I bet the lefties at the EPA will put the need to pay their bills above their socialist radical views. jmho