The Wonk Room

Spin Watch: Coal

From an article about coal in today’s New York Times:

“Watch out, consumer. You’re probably going to see accelerating electricity prices in 2009, 2010 and 2011.”

– David M. Khani, energy analyst at Friedman, Billings, Ramsey Group

HERE’S WHAT YOU NEED TO KNOW:Despite the U.S. coal industry’s incessant promotion of coal as “cheap“, coal prices have shot up. As global demand for coal soars and investors flee to commodities, Appalachian coal is up 93% and Wyoming coal up 64% from last year. Because coal contracts are purchased on a multi-year basis, changes in the market can take years to hit the consumer. However, sharp increases in Appalachian coal country are already here: on February 29 West Virginia subsidiaries of American Electric Power requested a 17% rate increase for 2008, on top of 5.5% and 10% increases in 2006 and 2007.