Regarding this report: "Alpha Natural Resources, a Onetime Coal Giant, Files for Bankruptcy Protecton [sic]"
http://www.nytimes.com/2015/08/04/business/energy-environment/alpha-natural-resources-a-onetime-coal-giant-files-for-bankruptcy-protecton.html?_r=0 Below are some interesting quotes from the article which point out the vulnerability of large energy companies to relatively small downturns in their business. This coal company along with several others is in grave condition because the market for coal has fallen by 15% since 2008. In some other industry with less overhead and lower capital investments, an industry-wide loss of 15% over seven years would be a problem but it would not trigger bankruptcy. The desktop and laptop computer business has declined by similar numbers in the last 5 to 10 years but it is not causing such large problems. McDonald's has also been losing business, and it is in trouble, but it is nowhere near bankruptcy If cold fusion comes along and takes away even a few percent of the business from fossil fuel and electric power companies, and it becomes clear that in the long term it will take a larger share, I predict this will have a drastic effect on these industries. These companies can only operate on a large scale. There is no point to sending an oil tanker half-full or even 90% full. You cannot operate a coal mine profitably for only 4 hours a day. If the demand for baseline electricity falls below the level provided by a nuclear reactor, the power company will be in huge trouble because nuclear plants cost millions of dollars a day whether you use them or not. I think this may be good news for cold fusion. It means the fossil fuel companies will be vulnerable. Of course the oil companies have billions of dollars stashed away, and great political power and influence in the Congress. But I think this money and power will be rapidly depleted. Look how quickly the coal companies ran through their stash of cash, and look at how little influence they now have in Congress, just a few years after their peak of production and high profits. Big coal is already on the ropes so it cannot easily fight cold fusion. I predict that big oil will not take cold fusion seriously and they will not begin to fight it soon enough to crush it in the early stages. If you do not crush something like this quickly, it will soon grow beyond your control. Once it gets into a few niche markets it will be profitable and it will grow rapidly, soon moving out to take over mainstream markets. There will be powerful corporations in favor of cold fusion. They will want to sell it, taking profits away from the coal and oil companies, which will be like taking candy from a baby. By the time the oil companies realize they are bleeding, they will be mortally wounded. That is what happened to the coal companies. Just a few years ago they were riding high. They ignored fracking, and they bet that wind and solar would go nowhere, and that the Chinese market would expand indefinitely. As I said, taking business away from such people is like taking candy from a baby. It is like watching Walmart, Target and Amazon.com bludgeon Sears to death. You feel sorry for the hapless management. It should be much easier to take business away from a coal company with cold fusion than it has been with wind and solar power, because cold fusion will not need a subsidy and it can be done on a small scale. (Wind only works on a large scale.) Cold fusion will also clobber the wind and solar industries. I predict they will also realize this too late to prevent it. I have heard anodyne comments from industry experts at ICCF conferences and elsewhere that we need an integrated energy system and all sectors will have a role to play. This is ridiculous. It is like looking at the first electronic calculators and small computers in 1979 and saying "I am sure there will be room in the marketplace for slide rules, mechanical calculators, and the abacus; we need an integrated data processing market where everyone plays a part." No, we don't. Anyone trying to compete with electronic calculators in 1975 was doomed. (The abacus is not a pretend example. Abacuses were in widespread use in Japanese banks well into the 1970s. The cashiers used them. Of course they were a ridiculous waste of manpower and time, and they forced the bank to do the same transaction two or three times before it finally reached the computer. Japanese institutions tend to waste manpower.) QUOTES FROM ARTICLE: The coal industry suffers from multiple problems. Natural gas prices have swooned in recent years, leading many utilities to switch from coal. The Obama administration on Monday unveiled a set ofEnvironmental Protection Agency regulations that could close hundreds more coal-fired generation plants. At the same time, China, which consumes 45 percent of the world’s coal, is steeply reducing the burning of coal to combat urban air pollution. And the strength of the dollar is reducing the competitiveness of American coal producers. As a result, coal production has been plunging in the United States, falling 15 percent since 2008. Still, stockpiles are mounting at mines as coal-fired power plants shut down month after month. The Energy Department expects a further drop of 70 million tons in coal production this year mainly because of a 7 percent decrease in demand by the electric power sector, which, in addition to natural gas, is increasingly turning to renewable energy sources like wind and solar power. Only a decade ago, coal supplied roughly half of the source of power for the country’s utilities; that percentage has dropped to about 40 percent. The Energy Department projects that coal will continue to lose market share over the next decade, although it will continue to be an important source of energy. “We are going to continue to see bankruptcies so the industry can get down to a size in terms of total capacity and output to have the financial wherewithal to be attractive assets at depressed prices and then operate profitably,” said John Lichtenstein, an Accenture Strategy managing director who advises coal producers. . . . - Jed
