The oddest claim of better times ahead is that coal miners are benefiting from lower oil prices because it means transport costs have been slashed at all levels of the mining, railing and shipping process.

At first glance that observation, attributed to a number of people including Queensland Resources Council chief Michael Roche, seems illogical because prices for coal and oil often track one another since they are both part of the same broad energy market.

This time, if you believe the theory, it is different with oil falling thanks to its own particular set of pressures, though in the long run The Hog is concerned that cheap oil will eventually infect every other sort of energy, including coal, nuclear and renewables.

Other explanations for coal companies starting to enjoy an improvement have more substance, including the first benefits of the lower Australian dollar and the acceptance by workers of wage cuts rather than risk losing their jobs in the same way 12,000 of their colleagues have already done.

According to one report the net result of the lower oil price, the dollar drop and labour cost reductions is that the number of Australian coal mines losing money has declined to around 25% of the total industry compared with 36% trading in the red earlier this year.

Putting a dollar number on the three positive factors effecting coal is not easy but Glencore, one of the biggest producers, reckons the net gain is around $US5 off the cost of producing a tonne of Australian thermal coal.

The head of coal and coke at Glencore Tor Peterson added to the optimism saying that he could see a shortage of coking coal emerging next year, and a shortage of thermal coal emerging in 2016.

If Peterson is right, then the combination of reduced costs and production cutbacks in a number of countries could see coal enjoying a return to its pre-crash days.

But, what’s both interesting and concerning is that all of the positive factors which seem to be at work are on the cost side of the accounts, not the income side.

Old-fashioned at the best of times, The Hog reckons that the best way to make money in any industry is to be well paid for what you produce. Cost controls are a good thing but at the end of the day the key to every business is revenue.

Put another way, it’s awfully difficult to “cut yourself to greatness”

Peterson reckons that demand might be improving in the next few years though not from the usual suspect, China.

The next upward push for coal is expected to come from other emerging markets which are smaller than China but nevertheless have fast-growing economies and a healthy appetite for coal-fired electricity.

Countries such as Turkey, Brazil and Vietnam might be much smaller than China but collectively they add up to a substantial market – and that’s before including India in the equation, which ought to be done despite the country having a record of never quite delivering on its promised growth.

Encouraging as the lower costs are, especially when added to the possibility of stronger demand, it would be unwise to think that the industry is out of trouble, yet.

Long-term contracts coming up for renewal over the next year will hit most of the major producers because they are currently well above the spot-market price for thermal coal with some estimates pointing to a $US20 per tonne gap between contracts signed two years ago and today’s prices.

When those contracts, priced at around $US82/t are renewed the spot price of $US62/t a sizeable chunk of that $20/t difference will flow into the new long-term price, delivering a sharp jolt to coal-company income levels.

Investment banks, which have been gloomy about coal over the past few years are starting to dust off their forecasts for the industry.

RBC Capital Markets reckons that the spot-market thermal coal price will pick up to around $US70/t next year, rising to $US80/t in 2016 with metallurgical coal averaging $US128/t next year and $US148/t in 2017.

It is possible that the good news about falling costs will react positively with the optimistic price forecasts to lift most Australian coal mines back into profitability, and that has to be a good thing – when and if it happens.