Obama Has a Big Smile on His Face

      Obama has a big smile on his face, because Peabody Energy (NYSE stock symbol BTU) filed for Chapter 11 bankruptcy today.  Peabody is the leading miner of coal in the United States and the world.  My, how the mighty have fallen. Just five years ago Peabody was flying high. Its stock price was over a thousand dollars a share and they had just completed the acquisition of Macarthur Energy, the largest Australian coal company in order to more easily supply clients in China, Japan, and South Korea. Peabody's executives over estimated the need for metallurgical coal for steel production as they did not expect the slow down in China and Brazil.  The five billion dollars in debt  for financing the purchase of the Australian coal company helped fuel the downfall (no pun intended).  In addition, Obama's war on coal through expensive and difficult EPA regulations have also contributed.
      Coal is a commodity and therefore its economics is ruled by supply and demand.  Currently there is a nine month surplus where normally the surplus is three because of the worldwide slowdown.  The cost of Obama's severe unconstitutional regulations on the coal industry has significantly added to overhead and subtracted from the bottom line.  Coal in different mines may cost more to mine and Appalachian coal mines are deep so there is more expense.  The price of coal is also based on its quality and in general the cost per metric ton on average has dropped from $80 to around $40.  The quality of Australian coal is better the most American coal, but even without regulations, at the current price, it is hard to make a profit.
      Forty percent of American coal companies have filed for bankruptcy.  Beside the investors, the miners will certainly suffer.  Bankruptcy may effect the contracts Peabody has with the UMWA.   Coal mining is a difficult job and Obama's regulations may make it more difficult.  Any bankruptcy has a trickle down effect and in the case of coal, railroads will be effected as well because the vast majority of coal is transported by rail to power plants or to seaports for export.  Finally, any taxes that Peabody could have paid will now not happen and the effect on any of the other tax paying entities and individuals will also be diminished.
      Although many American power plants have begun switching over to cleaner burning natural gas, that is also in abundance, coal fired plants will continue to supply about forty percent of America's electricity.  In addition, there are five hundred coal fired plants under construction all over the world. Hopefully, a new administration will revoke the costly and burdensome regulations.
      Obama's use of a hoax (that anthropogenic global warming actually exists) has caused an industry that supplies a vital energy resource to declare bankruptcy. His plan to destroy the American economy continues to move forward.  Fortunately he only has eight months left.