If you examine the weather, you would say it has changed. Why it has changed and what will happen in the future, we do not know but people have theories. One of the biggest is the use of fossil fuels, which we are not going to stop using today. Maybe in 25 years we will use less, we do not know. We do know if all of us used coal to heat our homes, the pictures of Bejing and LA of smog would be seen in many other places. Bejing and LA are built in valleys surrounding by mountains which tends to trap the air until the wind blows it clean. In the books about Jack the Ripper, the London smog was a main character. Every year there are more alternatives – hybrid vehicles, heat pumps rather than oil furnaces, greater efficiencies of fuel for internal combustion engines, however all these take time and money to change over from the normal.

In an article by Hiroko Tabuchi of the New York Times News Service, all business is essentially done through credit, if there is less credit, business has to adjust. In the case of coal industry, prices fell compared to natural gas and to generate electricity many power companies switched over to gas. Under those circumstances it was easier for banks to say they would no longer finance new coal mines. However, coal that is used in steel making is still financed. One of the banks that said they would no longer finance new coal mines was Bank of America and the climate activists rejoiced.

Two years later, the policy has changed to enhanced due diligence. The policy on the website has changed and according to the article, the bank has declined of what its risk review would include.

Many years ago, the bank which I worked at helped financed mega oil projects and it brought in considerable fees. It is hard to give that up and they have not (I still own shares in the company). The other aspect to mining, is similar to many other industries, robots can do more of the work particularly underground.

Linking to dividend paying stocks, when price of a commodity falls, investors turn to alternatives. When the price comes back up, they buy the companies that deal with the commodity. Money moves in many directions looking for the elusive return to maintain good margins and the company to make a profit. There are many investors with a wide variety of degrees of risk and every day they are active in the markets. Government policies affect the markets, but sometimes government policies are ahead of the reality of the market, this is good and bad. When policies are ahead, then incentives are needed for the market to catch up. Most of the time governments are behind the market, and incentives are needed to level the market. Investors want a good return and it is easier to gain a good return if the company is profitable.

There are more questions than answers, till the next time – to raising questions.