US Coal Consumption Drops 17% But Coal Exports Booming In 1st Quarter

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The combination of warm weather that depressed electricity demand and massive switching to natural gas created the perfect storm for coal consumption in the USA, during the first quarter.  Coal consumption dropped about 17% and reached the lowest level since 1988, according to EIA data.
www.eia.gov/coal/production/quarterly/.

While US coal consumption fell sharply, US coal exports had another exceptionally strong quarter, rising when compared to the first quarter of 2011, that was itself a quarter of high exports.  Though exports are a bright spot for US coal, about 90% of coal is consumed by power plants, and the fierce competition with gas has depressed US coal consumption.  


What is the future of coal around the world and in the US?

Outside the USA, the shale gas revolution is not a reality so far, and natural gas is 3 to 6 times the price it is in North America.  And so coal does not face around the world the same intense competition from gas, as it does in America.  Indeed, coal globally enjoyed its best year in 2011, when it provided more of the world's total energy than it had since 1969.  Its prospects look good as long as the shale gas revolution remains restricted to North America.

Within the USA, coal consumption will rise from its record low level with rising gas prices and fall with falling gas prices.  $2.75 per thousand cubic feet is one tipping point price for coal-gas substitution. Most analysts project gas prices rising over the next 2 years and that will likely allow coal to recapture some lost market share.

But how much generation market share coal will recapture in the next year or two is uncertain and depends greatly on the extent of gas price increases.