Gregor Weekly Macro Note: Saturday 12 December 2009

• Gregor Macdonald
• December 12th, 2009

Let’s talk about oil and coal: In the Summer of 2003, having already embarked on my oil journey, I took out a sheet of paper and started making notes on the global coal sector. To my initial astonishment, the entire listed market cap of coal names on the NYSE came in just shy of 30 billion. I knew nothing about coal at the time. But it was clear that 30 billion was an extraordinarily low valuation for the sector. The total BTU of energy represented by NYSE listed names would have been (and still is) gargantuan. And yet I believe just a single name, such as ConocoPhillips, had at that time a slightly larger market cap.

The US listed coal sector would go on from 2003 to roughly quadruple, into the highs of 2008. World coal consumption coming out of 2002 would lift, intensely, above the decade long flatline that had marked the previous decade. Of course, much of that advance would be driven not by the developed but by the developing world. Currently I have a couple of coal charts that are loaded into my main website, www.gregor.us. The first chart is that of China’s coal consumption from 1997-2007. The second document shows total global consumption of coal in the same decade, and also the previous decade. The charts reveal (in part) what happens when the new user of energy comes on line, and faces choices about which energy sources to use. More often than not, that choice is coal.

I bring this up as a way to probe further into that difficult mix of opposing, macro factors that I began to discuss week before last. You will recall that I see the following three trends as emergent, now that we are crossing into 2010: (this article continues for subscribers through the membership gateway, on the right side of this page)

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More from Gregor Weekly

• Gregor Weekly Macro Note: Saturday 03 October 2009
• Gregor Weekly Macro Note: Saturday 19 December 2009
• Gregor Weekly Macro Note: Saturday 26 September 2009
• Gregor Weekly Macro Note: Sunday 27 December 2009
• Gregor Weekly Macro Note: Saturday 31 October 2009

From the Stocktwits Network

• Stock to Watch for Tuesday 12/22/09 (Joe Fahmy)
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Tickers: Coal, COP, GLD, KOL, MOO, SLV