Our Outlook for Utilities Stocks 'Til death do us part: Merger partners now tied, but power prices still deadly. (By Travish Miller - Morning Star)

• Although natural gas and power prices stabilized in the second quarter, they remain at levels that are compressing margins for coal and nuclear power producers. 
• Utilities are still doing exceedingly well with mergers this cycle as Northeast Utilities and Exelon closed their multibillion-dollar deals last quarter. Duke appears set to close its merger by July after receiving key federal go-ahead. 
• The sector's average 4.2% dividend yield still offers a historically attractive spread over U.S. Treasuries, suggesting regulated utilities could continue their phenomenal three-year run. 

For several quarters now, utilities investors have woken to the same story. Low interest rates continue to offer an impressive tailwind for utilities that can drive earnings higher with low borrowing costs and offer investors attractive dividend yields with growth. But market-exposed power producers continue to suffer from persistently low power prices that are compressing margins for coal and nuclear operators.

For regulated utilities, the near-term outlook remains bright even as valuations stretch well beyond historical norms. A group of the 31 largest U.S.-regulated utilities returned 5% between March and June, handily beating the S&P 500's negative 3.5% return and all 11 market sectors, yet have trailed nearly all other sectors year to date. For utilities that can avoid punitive regulation, we think investors could still realize 4%-6% dividend growth to go with near-4% yields.

For power producers, fundamental changes are taking hold in power markets as coal plant shutdowns accelerate, natural gas generation skyrockets, and reserve margins face dangerous tightening during the next three to five years. We now count 35 GW of planned or executed coal plant shutdowns since late 2010, up from 30 GW last quarter and closing in on our 53 GW estimate. Gas generation in March hit its highest share of total U.S. generation in at least 40 years at 30%, while coal's share fell to its lowest level at 34%, based on the most recent government data. In May, the Texas grid operator's semiannual long-term outlook projected state reserve margins tightening below its target range as soon as next summer.

Industry-Level Insights
Languishing power and gas prices continue to weigh on earnings for diversified utilities and power producers. Year to date, gas prices are down 13% and power prices are down 6%. We now think earnings for most utilities with power market exposure will hit troughs in 2013-14. Coal plant operators are facing shrinking dividend coverage, liquidity concerns, and even restructuring from compressed margins and fast-approaching environmental compliance requirements.

We believe political and regulatory uncertainty are depressing power and capacity prices. Two key environmental regulations finalized in 2011 face legal challenges and political uncertainty going into the November elections. We believe power prices reflect very little of the full impact we expect from these regulations. Political intervention also appears to be depressing capacity values for emissions-controlled and clean incumbent generators. Subsidized projects in New Jersey and Maryland cut 2015-16 Mid-Atlantic capacity prices in half from our normalized estimates for certain regions, and New York is assessing subsidized generation options. Depressed power and capacity prices hurt utilities such as Exelon (EXC), GenOn Energy (GEN), and NRG Energy (NRG) the most because of their large exposure to competitive power markets.

Even if power, gas, and capacity prices stay low, we think tighter power markets and increased reliance on gas generation could lead to more volatile power prices. This should favor the largest, most diversified utilities such as Exelon, NRG Energy, and FirstEnergy (FE). These utilities moved early to pair their wholesale generation with a growing retail supply business. This pairing gives them a cost and liquidity advantage over other retailers, offering a rare competitive advantage that could lead to industry consolidation and margin expansion. Exelon in early June projected $100 million of revenue synergies from its combination with Constellation's retail business. NRG Energy is realizing similar benefits in Texas.

For all utilities, we think regulatory risk remains the key threat. The 770-basis-point spread between recently awarded allowed returns and U.S. Treasury rates is the widest in at least 20 years and 190 basis points above the 20-year average. Mean reversion would hit earnings hard. Merger approval also has been difficult, albeit successful. Regulators required rate credits, rate freezes, and/or commitments to uneconomic investments before approving Northeast Utilities' (NU) $9.5 billion acquisition of NSTAR and Exelon's $7 billion acquisition of Constellation, both of which closed this spring. These concessions will make it difficult for the companies to create value from the deals.

Similarly, Duke Energy's (DUK) $17.9 billion acquisition of Progress Energy (PGN) appears set to close by July 1, but only after the companies offered enough concessions to receive sign-off from federal regulators. Entergy's (ETR) proposed acquisition of ITC Holdings (ITC) also faces a difficult regulatory path.

Our Top Utilities Picks
 

On a market-capitalization-weighted basis, the average sector price/fair value ratio is 0.87, down from 0.90 last quarter. But the utility sector's 1.05 median price/fair value still highlights the sharp valuation divide we see between the relatively cheap, large diversified utilities and the relatively pricey, smaller regulated utilities.

Only two of the 33 regulated utilities we cover are trading below our fair value estimates as of mid-June. Yet paradoxically, dividend yields and growth prospects for many of those utilities still look attractive. The spread between the 4.2% utility sector average dividend yield and 10-year U.S. Treasuries at 260 basis points is the widest in at least 20 years, and most domestic utilities have no exposure to Europe's financial woes. For safety-minded, yield-seeking investors, we continue to point toward National Grid (NGG), American Electric Power (AEP), and Alliant (LNT).

Among diversified utilities and independent power producers, we still favor those with low-emissions baseload generation assets like Exelon and Ormat Technologies (ORA). As power markets tighten, we think GenOn Energy, NRG Energy, and Public Service Enterprise Group (PEG) can be winners.

Where Does Money Come From? The Giant Federal Reserve Scam That Most Americans Do Not Understand

How is money created?  If you ask average people on the street this question, most of them have absolutely no idea.  This is rather odd, because we all use money constantly.  You would think that it would only be natural for all of us to know where it comes from.  So where does money come from?  A lot of people assume that the federal government creates our money, but that is not the case.  If the federal government could just print and spend more money whenever it wanted to, our national debt would be zero.  But instead, our national debt is now nearly 16 trillion dollars.  So why does our government (or any sovereign government for that matter) have to borrow money from anybody?  That is a very good question.  The truth is that in theory the U.S. government does not have to borrow a single penny from anyone.  But under the Federal Reserve system, the U.S. government has purposely allowed itself to be subjugated to a financial system in which it will be constantly borrowing larger and larger amounts of money.  In fact, this is how it works in the vast majority of the countries on the planet at this point.  As you will see, this kind of system is not sustainable and the structural problems caused by such a system are at the very heart of our debt problems today.

So where does money come from?  In the United States, it comes from the Federal Reserve.

When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars.

Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve.

The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds.

So why does the U.S. government go to all this trouble?  Why doesn't the U.S. government create the money itself?

Those are very good questions.

One of the primary reasons why our system is structured this way is so that wealthy people can get even wealthier by lending money to the U.S. government and other national governments.

For example, last year the U.S. government spent more than 454 billion dollars just on interest on the national debt.

Over the centuries, the ultra-wealthy have found lending to national governments to be a very, very profitable enterprise.

The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system.

But wait.

There is a problem.

Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created.

So where will the U.S. government get the money to pay that debt?

Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt.

But that never actually happens, does it?

And the creators of the Federal Reserve understood this as well.  They understood that the U.S. government would not have enough money to both run the government and service the national debt.  They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game.

That is why I call the Federal Reserve a perpetual debt machine.  The Federal Reserve was created to trap the U.S. government in an endlessly expanding debt spiral from which there is no escape.

And the Federal Reserve is doing a great job at what it was designed to do.  Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

Another way that money comes into existence in our economy is through the process of fractional reserve banking.

I originally pulled the following simplified explanation of fractional reserve banking off of the website of the Federal Reserve Bank of New York, but it has been pulled down since then.  But I still think it is helpful in understanding the basics of how fractional reserve banking works....

"If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+...=$1,000)."

When you put your money into the bank, it does not say there.  The bank only keeps a relatively small amount of money sitting around to satisfy the withdrawal demands of account holders.  If all of us went down to the banks right now and demanded our money, that would create a major problem.

If I put 100 dollars into the bank and the bank lends out 90 of those dollars to you, now it looks like there are 190 dollars floating around.  I have "100 dollars" in my bank account and you have "90 dollars" that you just borrowed.

The new debt that you have taken on (90 dollars) has "created" more money.  But of course you are going to end up paying back more than 90 dollars to the bank, so more debt has been created than the amount of money that has been created.

And that is one of the big problems with our financial system.  It is designed so that the amount of debt and the amount of money are supposed to be perpetually expanding, and the amount of debt created is always greater than the amount of money that is created.

So is it any wonder that our society is swamped with nearly 55 trillion dollars of total debt at this point?

A debt-based financial system is unsustainable by nature because it will always create debt bubbles that will inevitably burst.

Are you starting to see why so many Americans are saying that we need to abolish the Federal Reserve system?

Our founding fathers never intended for our financial system to work this way.

According to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is supposed to have the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".

So why has this authority been given to a private institution that is dominated by the big Wall Street banks and that has actually argued in court that it is "not an agency" of the federal government?

Thomas Jefferson once said that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing....

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

But instead, we have become enslaved to a system where government borrowing actually creates our money.

The borrower is the servant of the lender, and we have allowed our government to enslave us to the tune of nearly 16 trillion dollars.

There are alternatives to this system.  Things do not have to work this way.

Unfortunately, the vast majority of our politicians consider the Federal Reserve to be good for America and steadfastly refuse to do anything to change the status quo.

So if you are waiting for "solutions" to these problems on the national level you are going to be waiting for a very long time.

The debt problems that the United States and Europe are experiencing did not come into existence by accident.  They are the result of fundamental structural problems with the financial system.

A debt-based financial system is always going to fail in the long run.  Unfortunately, most Americans still do not understand this and so we will all get to suffer the consequences.

Money: How to Get It and Keep It

By Doug Casey, Chairman, Casey Research

 

Even if you are already wealthy, some thought on this topic is worthwhile. What would you do if some act of God or of government, a catastrophic lawsuit, or a really serious misjudgment took you back to Square One? One thing about a real depression is that everybody loses. As Richard Russell has quipped, the winners are those who lose the least. As far as I'm concerned, the Greater Depression is looming, not just another cyclical downturn. You may find that although you're far ahead of your neighbors (you own precious metals, you've diversified internationally, and you don't believe much of what you hear from official sources), you're still not as prepared as you'd like.

 

I think a good plan would be to approach the problem in four steps: Liquidate, Consolidate, Create, and Speculate.

 

Step 1: Liquidate

 

Chances are high that you have too much "stuff." Your garage, basement, and attic are so full of possessions that you may be renting a storage unit for the overflow. That stuff is costing you money in storage fees, in depreciation, and in the weight of psychological baggage. It's limiting your options… It's weighing you down. Get rid of it.

 

Right now, it has a market value. Perhaps to a friend you can call. Or to a neighbor who might buy it if you have a yard sale. Or to some of the millions of people on eBay. A year from now, when we're out of the eye of the financial hurricane and back into the storm, it will likely have much less value. But right now, there's a market. Even if most people are no longer wearing those "He who dies with the most toys, wins" T-shirts that were popular at the height of the boom, there are still buyers. But the general standard of living is dropping, and mass psychology is changing. In a year or two, you may find there aren't any bids and the psychology of the country has changed radically. People will be desperate for cash, and they'll all be cleaning out their storage units (partly because they can't afford the rent on them).

 

Liquidate whatever you don't actually need – clothes, furniture, tools, cars, bikes, collections, electronics, properties, you-name-it. You'll be able to re-buy something like it, or better, cheaper. Just as important, you'll feel light and mobile. Unburdened by a bunch of possessions that own you and weigh you down. It will definitely improve your psychology, which is critical to the next stage. And the cash it generates will be helpful for the rest of the plan.

 

Step 2: Consolidate

 

Take stock of your assets. After Step 1, that should be a lot easier because you'll have less junk but a lot more cash. You'll already feel more in control and empowered. And definitely richer. But your main assets aren't money or things. It's the knowledge, skills, and connections you possess. Take stock of them. What do you know? What can you do? Whom do you know? Make lists and think about these things, with an eye to maximizing their value.

 

If you're light on knowledge, skills, and connections, then do something about it – although if you're reading this, you probably already live life in a way that builds all of those assets daily. But there's always room for improvement. Think the Count of Monte Cristo. Or if you're not so classically oriented, think Sarah Connor after she met the Terminator.

 

Part of this process is to look at what you're now doing. The chances are excellent there's a better and more profitable allocation of your time. Even successful rock stars tend to reinvent themselves every few years. You don't want to get stale. That leads to Step 3.

 

Step 3: Create

 

Remember, the essence of becoming wealthy is to produce more than you consume and save the difference. But it's hard to maximize value working for somebody else. And when you're given a job, it can be taken away for any number of reasons. There is cause, and there is effect. You don't want to be the effect of somebody else's cause. You want to be the cause for everything in your life. That implies working for yourself. At least turn your present employer into a partner or an associate.

 

Perhaps go through the Yellow Pages (while they still exist), page by page, line by line, and see what you can provide as a service for the businesses advertising there. I promise you, they're all looking for someone to come along, kiss their world, and make it better. Think like an entrepreneur at all times. Remember that there is an infinite desire for goods and services on the part of the 6 billion other people on the planet. Find out how you can give them what they want, and the money will roll in.

 

I've said many times that I believe you could airdrop me naked and penniless into the heart of the Congo, and by the time I emerged, I'd not just have survived, I'd come out wealthy. And believe me, I don't think wealth is by any means the most important thing in life; it's important but should be considered a convenience, not an imperative. Not that I'd want to be airdropped into the Congo at the moment; I've gotten a bit lazy, I have other interests, and you can't be everywhere and do everything.

 

But now that I think about it, if I wanted to make a real fortune today from a small base, I might prefer Africa to any other continent. As an educated Westerner, you can quickly meet anyone, on an equal level, much more easily than you could at home. If you have a reason that makes any sense at all, you can be in the office of the president within a week. These countries are all plagued with incompetence and corruption, they need everything, and they're full of untapped resources and talent. This all inures to the great advantage of a foreign entrepreneur.

 

Here's an idea. For your next vacation, book a trip to Cameroon, Togo, Gabon, Zimbabwe, or Angola. Go through the Yellow Pages in the capital and meet everybody who is anybody. The chances are good you'll come up with several deals in the first week alone. If you can't find the time, send your kid who's just out of school and idiotically thinks he may want to misallocate time and money getting an MBA. This idea alone should be worth a million dollars. Or as I would prefer to think of it, 700 ounces of gold.

 

But to an economist, money, like all goods, has "declining marginal utility." In other words, the more of something you have, the less you need or want the next unit. Of course, more is always better, but it's unseemly, even degrading, to pursue anything beyond a certain point.

 

When I was in Toronto a couple months ago, I spoke with a Chinese friend who, I believe, is worth at least $250 million. As he waxed philosophic, he allowed that he didn't feel he really needed more than 30 extra large to live exactly as he liked. I agreed, in that meals in the best restaurants, the finest clothes, cars, and houses only cost so much. And it's well within a conservative return on that capital, without ever even touching the principal. Is it worth it to get more? Perhaps not, unless your interests in the rest of life are entirely too narrow. The point of money is to allow you freedom, not make you crazy with getting more.

 

That doesn't rule out speculation as an avocation, however. More – everything else being equal – is still better.

 

Step 4: Speculate

 

You've got money. Now, you have to keep it and make it grow, because staying in the same place amounts to going backwards. That's partially because the world at large will continue getting wealthier, even as the dollars you own lose value.

 

In the past, I've discussed why a lot of old rules for success are actually going to prove counterproductive over the next few years. Saving with dollars will be foolish as they dry up and blow away. Investing according to classic rules will be very tricky in a radically changing economy. Most people will try to outrun inflation by trading or gambling. The markets, which are the natural friend of productive people, will perversely prove very destructive to them in the years to come. You'll know when the final bottom in the stock market has come: The average guy won't want to hear about the stock market, if he even remembers it exists. And if he does, he'll want it abolished.

 

Instead of becoming a victim of inflation and other politically caused distortions in the marketplace, you can profit from these things. Rational speculation is the optimum approach.

 

What to Do If You're Already Wealthy?

 

Perhaps, however, you've already covered all the financial bases to your satisfaction. Quo vadis? I have several thoughts on the meaning of wealth. You may find some of them of value as prices of everything fluctuate radically in the years ahead.

 

First, recognize that wealth is a high moral good. Don't feel guilty about having it or about wanting more.

 

If you've already accumulated and deployed enough capital to allow you to jump off the golden treadmill, congratulations: Chances are high that you are an exceptional human being. I say that because the moral value of being wealthy is underrated. I don't mean that in a Calvinistic way, in that Calvin believed Yahweh rewarded the righteous by making them rich. But I do believe that productive people – people who work hard to provide goods and services for others – definitely tend to be wealthier than unproductive people. They deserve to be. And since we don't live in a malevolent universe, people generally get what they deserve. So yes, wealth is definitely one indicator of moral excellence.

 

Sure, some wealthy people got that way by lying, cheating, and stealing. But they're exceptions. It's much easier to become wealthy if (in addition to having virtues like diligence, competence, and judgment) you are known to be truthful and honest. Those who automatically think ill of the rich are, at best, paranoid fools. Put it this way: Rich people may lack some virtues, but they definitely have at least a few that made them rich. Poor people, on the other hand, will certainly lack some virtues, and they'll definitely have some vices that kept them poor.

 

I'm a fan of some aspects of Gurdjieff, the late-19th to mid-20th century Russian mystic, who was also a merchant adventurer at some points in his colorful life. He said that anyone who successfully employed at least 20 other people must be considered at least partially enlightened and a type of guru. That viewpoint always resonated with me. Self-made wealthy people may not be saints or mystics or intellectuals or even especially thoughtful or moral. But they've proven they're better than the average bear in at least one important way: They can create and conserve wealth. And they've thereby eased everyone's path to further accomplishments.

 

Second, figure out your purpose in having money.

 

Sure, money makes life easier. And it's nice how it enables you to assist people you like with material things. But I strongly suggest that you not take too short a view on this matter. Accelerating advances in medical science are not only lengthening human life expectancy, but new developments now in the works have the potential to vastly improve your capability and health as well.

 

Is it possible to live to age 200, with all the wealth, knowledge, and wisdom that implies, while maintaining the body of a 30-year-old? Not yet. But the prospect is on the horizon. It will, however, be available only to those who can afford it. Ray Kurzweil makes a case that the Singularity is near, and I buy his reasoning. It would be tragic indeed if anyone frittered away his wealth, thinking he wouldn't live very long, and then succumbed to a self-fulfilling prophecy, not because of medical difficulties, but because of financial difficulties.

 

Third, don't give your money to charity.

 

Entirely apart from showing a lack of both imagination and foresight, it's a complete waste of good money, pure and simple. Contrary to popular opinion, it rarely does any good; it often does great harm. The whole concept of charitable giving is corrupt and desperately in need of a complete rethinking.

 

Fourth, if you do care about posterity (who knows, you might be reincarnated…), and on the chance you don't make it to the Singularity, carefully consider how to dispose of your estate.

 

For one thing, there's no reason to automatically leave anything to your children – unless they deserve it. The notion that someone should inherit just because he shares your genes is flawed and thoughtless. The example of Marcus Aurelius leaving the Roman Empire to his worthless son, Commodus, should be instructive. Wealth should be left to someone who is most capable of increasing it – at least if you want to benefit humanity in general. And yes, I'm quite aware that humanity in general may deserve absolutely nothing.

 

At a minimum, consider that memes are far more important than genes. It's wiser, therefore, to leave your wealth only to individuals (related to you or not) who will carry forth values you hold dear and are worthy of the wealth. If nothing else, make sure you disinherit the government.

 

Also consider that dividing wealth dissipates it and generally makes it less useful. If you have a $1 million, you could leave a $1,000 to each of 1,000 people. But apart from the fact that it's unlikely anyone knows a 1,000 worthy people, that much money is only enough for a modest vacation or a few baubles. The larger the pool of capital, the more ways it can be used, the more creative power it has, and the more likely it will be conserved and used creatively. I favor the Roman system, in which one could adopt children of any age – but always after you could see what their character was. You might want to do that if your own kids don't make the grade.

 

The Bottom Line

 

If you want serious money, you have to get serious about money. You need to understand these fundamentals and never forget them. Don't let all the garbage reported in the financial media you read, see or hear confuse you about what money really is. Don't consume more than you make: save! Don't spend: invest!

Spain in Denial (Quotes from Porter Stansberry)

"There is no financial crisis in Spain."

The above quote is from the chairman of a Spanish bank whose stock chart looks like this…

Emilio Botin, chairman of Spain's biggest bank, Banco Santander, today told Reuters his country is not suffering a financial crisis. Experience has taught us that when a financial executive (or government official) says there's no problem, there's a problem.
Of course, Botin revealed himself in his next breath… he told Reuters that Spanish banks need 40 billion euros to stay afloat, adding those figures are "perfectly accessible." We're sure the cost to bail out the Spanish banking system will be much larger than 40 billion euros. It likely will cost hundreds of billions of euros… But 40 billion is a good start.
While Botin is trying to calm fears… Spain's Treasury Minister Cristobal Montoro basically told the world, in an interview on Spanish radio, that his country is shut out of global credit markets… "The risk premium says Spain doesn't have the market door open" he said. "The risk premium says that as a state we have a problem in accessing markets, when we need to refinance our debt."
Spain is going to test the credit markets on Thursday by issuing 1 billion-2 billion euros of medium- and long-term debt. If we were the treasury minister of a country in crisis, we probably wouldn't be making announcements like this two days before an important bond auction…
With the imminent wave of liquidity about to hit Europe, it's no wonder global gold demand continues rising… Recent data show Hong Kong shipped 101,768 kilograms of gold to mainland China in April, up 62% in one month (and the second-highest monthly export in history). And Iran imported $1.2 billion of gold from Turkey in April (up from $7,500 a year earlier). In the U.S., sales of American Eagle gold coins more than doubled in May to 53,000 ounces, up from 20,000 in April.

Vix Analysis (quoted from Porter Stansberry)

The VIX serves as a sort of "fear gauge" for the stock market… The index measures the prices people are willing to pay for options that protect the value of their stock holdings. The higher the VIX, the more people will pay to insure their stocks… hence, the more scared they feel. And when investors and traders are scared, they also sell assets they deem risky… And as we know, when the herd is selling, bargains abound.

The chart below is a five-year chart of the S&P 500. Beneath that is a corresponding chart of the VIX for the same time period. As you can see… sharp rises in the VIX usually correspond with market bottoms. In September 2008, the market fell off a cliff. That's the month investment bank Lehman Brothers went bust. Investors were selling indiscriminately. The financial markets were panicked. The VIX, as you can see, quadrupled to 80.

Today, the market is scared… notably of a slowdown in China and a collapse in Europe. The S&P 500 has sold off 10% from its 2012 high in April. And the VIX has increased from around 15 then to above 27 yesterday. We're far from extreme panic of late 2008.

Commodity Prices - Coal in Declining Trend

The worries of a global slowdown pushed oil prices to less than $82 a barrel today... highlighting Porter's outlook of lower oil prices and higher natural gas prices. A global slowdown plays into Porter's belief... But he's more focused on the huge shift in the energy markets that's being driven by the incredible amount of oil being found in the United States. (For example, the oilfield we learned about at the Atlas meeting could be the second-biggest in U.S. history.)

Falling oil and low natural gas prices have destroyed the coal market... Coal – which fuels roughly half the electricity generated in the U.S. – competes directly with natural gas in the power market. But coal is much dirtier than clean-burning natural gas (which makes it unpopular with politicians). So with natural gas prices near record lows, the market is avoiding coal. You can see the result in the following chart of Peabody Coal (BTU)... the largest U.S. coal miner by volume...