NEW YORK (TheStreet) -- Coal is the most popular fuel source in the world, according to the Institution of Mechanical Engineers. But it has certainly not been a favorite of the investment community of late.
Market Vectors Coal (KOL), an exchange traded fund for the sector, is down nearly 23% for the last year of market action. Over that same period, Peabody Energy (BTU), the biggest publicly traded coal company, is off by just over 23%. Both are down for 2014, too. But there are three reasons to be bullish about the long term prospects of the coal industry.
1. Demand is starting to grow for coal.
The Power Ministry of India recently reported that the country's demand for coal had increased by 31% for the April to January period. India is the third-largest user of coal in the world. China, the biggest consumer, is expected to raise its consumption by 2.3%, according to the International Energy Agency.
2. The price of other fossil fuel sources is climbing as that for coal is falling.
Along with coal, oil and natural gas provide the bulk of the world's energy supply. Unlike coal, however, the price for oil and natural gas has been rising. The United States Natural Gas (UNG) ETF is up more than 26% in 2014.
Over that same period, United States Oil (USO), an oil ETF, is up around 9.50%. That makes coal a more attractive fuel source, based on price. As an example, utilities in the United States are now switching from natural gas to coal due to the cost differential.