Wednesday, February 19, 2014

Coal's Happy Days: US Coal Consumption Rose 3.5% In 2013 and Projected 4.1% Increase In 2014

Coal continues to win the "war on coal," with coal consumption rising in 2013. Coal's rise last year was fueled by higher natural gas prices.  And gas prices have risen still higher in 2014; so coal consumption is projected to grow 4.1% in 2014.  Below is the EIA most recent data:

"U.S. Coal Consumption.  EIA estimates total coal consumption for 2013 to be 920 MMst, a 3.5%
increase over 2012. The increase was primarily a result of increased consumption in the electric
power sector due to higher natural gas prices.  Projected consumption grows 4.1% to 958 MMst
in 2014 as electricity demand grows and natural gas prices continue to rise.

US coal consumption is almost completely driven by coal-fired power plants, and so coal consumption in 2015 will depend on whether coal generation's market share. In turn, the amount of coal combusted at power plants hinges on the price of natural gas.

In short, if the price of natural gas in 2015 is the same or higher than it was in 2014, US coal consumption will likely remain stable or grow. Conversely, if natural gas prices fall below $4 in 2015, coal consumption will fall too.

In truth, the so-called "war on coal" is a war between gas and coal.

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