Coal producers were expecting a better year in 2014, but it didn’t materialize. Several factors limited the gains for coal producers: railroad congestion, a mild summer and indications that coal prices have not hit bottom.
Ken Colburn, a senior associate at the Regulatory Assistance Project, said Environmental Protection Agency rules made new coal plants prohibitively expensive and led to the closure of several older plants. In theory, decreasing supply would lead to an increase in price, but that isn’t what happened. Instead, producers found that there was still an oversupply of coal, partially because of the additional large supply of cheap natural gas.
“I think the EPA is probably enjoying a scenario where the market is doing a lot of its work for it in terms of its concerns about coal-based emissions,” Colburn said.
Goldman Sachs released a report last week projecting that the price of thermal coal will fall. The investment bank also said it’s likely the price of metallurgical coal will not improve much.