The Conspiracy to Manipulate the Coal Market Was Pure Collusion Dressed Up As Climate Change Virtue

Yesterday, I published the news release issued by Texas Attorney General Ken Paxton regarding that lawsuit against BlackRock, State Street Corporation, and Vanguard Group (“BSV”) by a coalition of states. The BSV Gang of Three, it was asserted, had conspired to artificially constrict the market for coal through anticompetitive trade practices wearing of a cloak of climate virtue signaling. Since then, I’ve had an opportunity to dig into the lawsuit itself. It is a stunning example of pure collusion and it lays open, for all to see, the corruption and rot at the heart of the entire climate con.

Our Modern Day Robber Barons?

The background is this (emphasis added):

Among coal producers responsible for more than 5 million tons of coal in 2022, eight are publicly held: Peabody Energy; Arch Resources; NACCO Natural Resources; CONSOL Energy; Alpha Metallurgical Resources; Vistra; Hallador Energy Company; and Warrior Met Coal. These eight firms are responsible for approximately 46% of total domestic coal production and significant shares of the domestic production of thermal coal and, along with the Black Hills Corporation, of South Powder River Basin (“SPRB”) coal…

Defendants are three of the largest investors in global coal production. As of February 15, 2022, BlackRock’s total investment in coal was $108.787 billion; Vanguard’s, $101.119 billion; and State Street’s, $35.736 billion.

Defendants, and their subsidiaries and affiliates, acting by and through the funds, trusts, and other investment vehicles that they manage and control, have acquired substantial shareholdings in, and have become the three largest shareholders of America’s publicly-held coal companies…

We all knew, well before the states filed their complaint, that the BSV Gang of Three was colluding to supposedly advance the energy transition to save the planet. Much of the press on the subject, especially from conservative news organs, focused on the political side of the story. It was that these three companies were trying to kill coal to make a market for the corporatist climate con while putting themselves at the top of the globalist food chain and power structure.

What we did not know was that they were also colluding to make huge money at the outset by cornering the coal market. That way they could unjustly profit off both sides of the climate debate; stealing from consumers of electricity at both ends. The extent to which they did this is absolutely staggering as the following excerpts from the complaint indicate:

Defendants’ sharing of information, their communications with management, and their voting of their shares have had the intended effect of artificially reducing coal production and constraining supply. Defendants’ acquisitions of shares enabled Defendants to substantially lessen competition in domestic coal markets. The companies in which Defendants have ownership stakes generally reduced production in the relevant coal markets—dramatically increasing the price of coal—all as privately held coal companies in which Defendants have no ownership stake scrambled to increase production and capture larger market shares (though their efforts could not nearly match the magnitude of the publicly-trade companies’ reduction in production)…

The result of Defendants’ efforts to bring about industry-wide output reductions have been precisely what the antitrust laws exist to prevent—increased prices, lower production, surging revenues for producers, and massive supra-competitive profits for producers.

From 2019 through 2022, Peabody Energy’s production fell by 34.7 million tons or 25.5%. During the same period, its revenues rose by $358.5 million and its profits soared by $1.593 billion, or 853.9%.

Over the same period, Arch Resources’ production fell by 9.4 million tons, or 11.7%, while its revenues rose by $1.448 billion, and its profits soared by $1.097 billion, or 469.2%.

Over the same period, NACCO Natural Resources’ production fell by 6.1 million tons, or 17.6%, while its profits increased $4.189 million, or 12%.

Over the same period, CONSOL Energy’s production fell by 3.2 million tons, or 11.8%, while its revenues rose by $685.3 million, and its profits increased by $423.1 million, or 214.7%.

Over the same period, Alpha Metallurgical Resources’ production fell by 6.4 million tons, or 28.7%, while its revenues rose by $1.843 billion, and its profits increased by $1.223.8 billion, or 342.7%.

Over the same period, Hallador Energy’s production fell by 1.7 million tons, or 20.7%. Its revenues also fell by 35.9 million, while its profits increased by $112.6 million, or 237%.

Over the same period, Warrior Met Coal’s production fell by 2.0 million tons, or 25.8%, while its revenues rose by $471.6 million, or 38%, and its profits increased by $418 million, or 109%…

…In sum, the data demonstrates that publicly held domestic coal producers were not responding to the laws of supply and demand. They were instead answering to Defendants, who acquired substantial shareholdings in each of these companies, possessed the power and the will to reduce the companies’ production of coal, and made public commitments to vote management out of office if they failed to reduce coal production and publicly disclose both reduction targets and the data establishing compliance with those targets. What happened next was economically predictable: Defendants’ acquisition of shares in the Coal Companies caused a substantial reduction in competition between those firms.

That lack of competition, of course, had to have had an impact on electric prices paid by consumers. We all paid more for electricity produced by coal and then paid again as massive subsidies went into solar and wind, giving a whole new meaning to what burning the candle at both ends means and filling the pockets of the BSV Gang of Three, our modern-day robber barons.

#Coal #Texas #Black Rock #StateStreet #Vanguard #Collusion #Climate