Exxon drops out of the S&P 500 top 10. Also, the decline of American coal is taking a toll on the railroad industry

Reproduced from Moody’s; Chart: Axios Visuals

No matter what President Trump says, coal in America isn’t coming back — and it’s bringing other industries down with it.

Driving the news: Coal demand for electricity is likely to drop by more than 50% in 11 years, according to a report by the rating agency Moody’s. In turn, revenue from transporting that coal around the country via trains is expected to drop $5 billion by 2030, or 5.5% of the railroad industry’s 2018 revenue.

The big picture: Coal’s dramatic decline is fueled by several factors: cheaper natural gas and renewable electricity, tougher environmental regulations in the Obama administration and the global shift to cleaner sources of energy in the face of climate change.

One level deeper: Because of the industry’s outsized dependence on coal, the fossil fuel’s decline is hitting railroads especially hard. Coal makes up 13% of total freight volume, which is the largest single freight commodity moved by rail.

  • 4 railway companies, led by CSX and Burlington Northern Sante Fe (BNSF), get more than 10% of their revenue from coal and are thus most at risk for revenue hits.
  • CSX gets nearly 20% of its revenue from coal, while BNSF gets nearly 17%.
  • Moody’s says credit effects for U.S. railroad companies “are likely manageable if the [coal] decline remains gradual.”

Go deeperMoody’s developing new rating system to assess companies’ “carbon risks”


Exxon Dumped From S&P 500 Top 10 For First Time In 90 Years

September 3rd, 2019 by Steve Hanley 

When the S&P 500 index was created 90 years ago, the energy sector was one of its largest components and the company that came to be known as Exxon was the big dog in that sector. A decade ago, the energy sector represented 11.7% of the index. Today, it is just 4.4%, having been replaced increasingly by technology companies.

When S&P published its latest numbers at the beginning of September, Exxon was no longer in the top 10 companies, for the first time in history. It has slipped to number 12 and now represents just 1% of the total index. Microsoft, Apple, and Amazon are ranked first, second, and third, respectively, according to OilPrice.com. The other companies in the S&P 500 represent information technology, communications services, financials, consumer discretionary, and health care sectors. Visa has now replaced Exxon in the Top 10 rankings.

Bill McKibben celebrated the news with this tweet:

Bill McKibben@billmckibben

Many thanks to all who’ve worked to undermine this most aggressively irresponsible of corporations–for the 1st time in the 90 year history of the S&P 500, Exxon drops out of its top 10 stockshttps://finance.yahoo.com/news/exxon-poised-drop-p-500-214917414.html …Exxon Poised to Drop From S&P 500’s Top 10 for First Time Ever(Bloomberg) — Exxon Mobil Corp. is poised to drop out of the S&P 500 Index’s 10 biggest companies for the first time since the index’s inception some 90 years ago, the consummation of a long-term…finance.yahoo.com2,8945:22 PM – Aug 30, 2019Twitter Ads info and privacy1,071 people are talking about this

“The oil sector has gone from being the leader of the world economy to a laggard,” Tom Sanzillo, director of the Institute for Energy Economics and Financial Analysis, tells Yahoo Finance. In the “be careful what you wish for, you just might get it” department, Yahoo Finance says the recent shale gas boom has driven down prices and made investors look elsewhere. Like a snake eating its own tail, the energy industry is increasingly desperate to remain relevant in a world in which people have discovered that sunlight, wind, hydro, and geothermal energy have zero fuel costs and competitive purchase costs, so why not use them?

OilPrice.com says volatile oil and gas prices, sudden price slumps, and concerns about future oil demand have combined over the past few years to make investors shun oil and gas stocks, making them one of the worst performers as a sector in recent months. In 2019 so far, the energy sector of the S&P 500 has been the worst performer among major industry sectors even though oil prices are higher now than they were at the start of the year. The S&P 500 is up nearly 15% this year, while the energy portion of that index is down more than 3%.