Coal is known to power factories and industrial plants around the world. It is messy, most often the most popular alternative for energy and, today, is the most expensive fossil fuel on earth.
Currently the price of a barrel of oil is just over $20 - from about $60 a few months ago - because of a huge surplus caused by Russia and Saudi Arabia raising demand as the countries compete for market domination.
The unprecedented crash of oil over the last month means that, according to Bloomberg estimates, the global crude benchmark is now priced below the most commonly traded coal contract on an energy-equivalent basis.
All these factors have officially made coal the most expensive fossil-fuel in the world. The coal industry was already on its way out and this development could accelerate its decline, but by transferring them to the growing renewable energy market, there is an opportunity to keep coal workers working.
Although coal usage has declined in the U.S. and Europe due to cheap natural gas and renewables, as well as the growth of flat energy demand, consumption continues to rise in Asia, where it has historically been the most accessible alternative for energy-hungry emerging markets.
Coal is also the dirtiest fossil fuel, releasing about twice as much carbon dioxide as natural gas when burned and 30 percent more than gasoline. As well as producing a huge oil surplus for Saudi Arabia and Russia, the coronavirus epidemic has caused the market for oil to decrease as flights are cancelled and people drive less. This is where coal comes in the picture.
To incentivize switching plants and investments away from coal, the current top price rating, which is more a result of the sudden fall in oil prices than an increase in demand for coal, must be maintained.
According to a study conducted by Goldman Sachs Group Inc., coal usage in Japan could fall slightly this summer in favor of cheaper LNG in the short term. With the coal industry struggling to remain competitive, its price being suddenly the highest among fossil fuels could have a huge effect on the market. Selling coal is a lot harder because it is no longer one of the cheapest energy generating options.
Meanwhile, ICE Futures Europe, an energy exchange based in London, reported that the price per ton of the Newcastle coal from Australia reached $66.85 on Friday. As compared to oil, this quality is shown to be well above the barrel price of oil, which is 27.36 dollars.
