Alternative energy may be the future, but fossil fuel prices are skyrocketing thanks to a combination of surging demand and limited supply. U.S. crude oil prices and natural gas prices recently hit multi-year highs, but coal prices are at all-time record levels.

Energy Market Imbalance: Coal is considered one of the dirtiest major global fuel sources, but it still represents 9.9% of U.S. energy usage, more than solar (1.3%), wind (3.2%), hydropower (2.8%) and biomass (4.9%), according to the U.S. Energy Information Administration.

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Outside of the U.S., coal plays a much larger role, accounting for around 40% of the world’s electricity. As economies around the world have reopened following the COVID-19 pandemic, demand is booming while coal production is about 5% below pre-pandemic levels.

This imbalance has Australia’s Newcastle thermal coal prices, often used as a global benchmark, soaring more than 200% above pre-pandemic levels, recently reaching $202 per metric ton. In China, coal shortages have contributed to the largest electricity shortfalls in more than a decade.

Looking ahead, Thrasher said the current environment is a clear demonstration why a “dose of logic and reality” is needed in the global energy market.

“We’ve had since the Second World War a very reliable buildout of the electricity generating system in the grid,” Thrasher said.

That grid based on fossil fuel energy took 80 years to develop.

“To think that we’re going to change that in a five or 10-year period, I think is unachievable — physically unachievable.”

Benzinga’s Take: Alternative energy will certainly eventually account for the lion’s share of global energy demand. It will likely take decades for the world to wean itself off fossil fuels, and the 2021 returns of coal stocks suggest there are plenty of excellent energy sector investments outside of renewable energy in the meantime.

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