The Latest Salvo in the War on Coal

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Time to Buy This... The time to buy an oil or gas company drilling in a new shale formation is when: Production is just starting; Initial wells are showing great results; and The mainstream investing public knows very little about it. There's a new $1 company in the historic Petroplex formation that meets all three of these conditions. With nearly 20,000 acres of land and great initial results on its horizontal wells, it's only a matter of time before this company trades at $10. Click here for the ticker symbol. The Latest Salvo in the War on Coal By Keith Kohl | Friday, July 3rd, 2015 There's a war happening... For the last few years, we've been caught up in the back-and-forth between two distinct factions. On one side is President Obama, armed with the Environmental Protection Agency, and on the other side are coal companies, utilities, and most Republican politicians. Republican Senate Majority Leader Mitch McConnell accuses the president of inciting a “war on coal” whenever he discusses the most recent energy regulation. And if this is indeed a war, it's a very one-sided one at that. Take a look at this... The chart above shows the last five years for shares of Arch Coal (NYSE: ACI) and Peabody Energy (NYSE: BTU), two stalwarts of the coal industry, versus the performance of the S&P 500. The market at large went up nearly 100% in just five years, while coal stocks dropped by 100%. Peabody, the world's largest coal company, once traded at nearly $90 per share but now trades for less than $2. Hey, the company still pays a dividend (of $0.01 per year)... if you like low yields. But in all seriousness, the dramatic free-fall for Peabody and all other coal companies has been the result of a wave of regulations laid down by Obama and the EPA under the authority of the Clean Air Act. Utilities and coal producers have to comply with each and every rule, and the only way they can fight against them is through legal action. But as a case earlier this week showed us, legal action is largely a moot point while the government continues to wage its war. Advertisement Why Obama Really Hates Keystone! Frankly, it's because he's already got an energy ace up his sleeve... A "secret pipeline" that could be the answer to the nation's — and the world's — energy problems. And it could also make savvy investors rich in the process. But only if they see the exclusive details of his plan. Click here to see the plan... and how you can profit starting today. What a Waste of Time In the latest salvo between the two sides in the war on coal, it appears as though the coal power industry recorded a victory. On Monday, in the case Michigan v. EPA, the Supreme Court ruled against EPA regulations on emissions of mercury and other heavy metals from power plants by a vote of 5 to 4. Justice Antonin Scalia issued the majority opinion in the case, and he argued much in the same way others have argued against EPA regulations: “The agency must consider cost — including, most importantly, cost of compliance — before deciding whether regulation is appropriate and necessary.” Several opponents of the EPA hailed the decision... Texas Governor Greg Abbott said the ruling was “good news for Texas.” The state's Attorney General, Ken Paxton, said the ruling was a “victory in our efforts to rein in an out of control EPA.” However, if you look closely at the situation, the mercury ruling by the Supreme Court does little to hurt the EPA or any of its regulations against coal. For one, the rules on carbon emissions from new and existing plants are still intact, and this ruling offers no precedents for future litigation. Also, Monday's decision doesn't actually kill this regulation in any way; it just forces the EPA to rewrite the rules with more attention to cost and benefit, which some estimate as $10 billion in cost versus $80 billion in benefit. When the rules are rewritten to include cost (this could take years — after all, the EPA is a government agency), it isn't a stretch to assume they'll survive the courts. Even then, these rules are several years old and went into effect in April. By that time, most utilities had either upgraded their facilities in order to comply with the rules or shut down operations as a result, and it is unlikely they will decide to reverse upgrades already in place. So even though the coal industry technically won a ruling in the highest court in the land, it's all a waste of time since the damage has been done and the rule will likely remain in effect. The only real outcome from the case was a brief but powerful spasm of false hope for coal investors... Advertisement Another "Bakken Bomb" Goes Off On February 16, a massive Bakken crude oil train derailed and exploded in West Virginia. The violent blast destroyed a home, leaked countless gallons of oil into a source of drinking water, and caused 1,000 people to evacuate. Just two years ago, another "Bakken Bomb" crashed and exploded in Lac Mégantic, Quebec, killing 47 people and destroying a small community. These and multiple other crashes have prompted regulators to crack down. And when they do, investors in one small company will see a financial windfall. If you play it right, this stock could hand you a payday of $35,465 within a year. Here's everything you need to know. A Paroxysm of Exuberance On Monday, after the ruling was announced, Peabody's stock rose by nearly 20% as investors flooded in on the hope that the decision was more valuable than it really is. They were wrong, and they paid for it when the price fell back down to earth. But other investors should realize that this war on coal doesn't just kill the industry — it also creates investment opportunities in the industries that replace coal power. Nuclear energy, in theory, is a good replacement, but the world hates nuclear power because of its risk potential. The real answer here is natural gas or renewable energy. In truth, both are good investments: Solar has been one of the best-performing industries of 2015, as costs drop every day, and natural gas is poised to see an historic bull market that will make coal investors green with envy. In the next couple of months, I plan to show my loyal readers an investment package based on the transition away from coal power and into other forms of energy. I can virtually guarantee that it will be worth a lot of money to the people who pay attention and decide how they'll power their homes and brokerage accounts. While you wait for this report, I suggest you take a look at another one of my investment reports, where I detail an undervalued oil company with its own chance at an energy fortune.  Until next time, Keith Kohl @KeithKohl1 on Twitter A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page. 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