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A Bleak Outlook for Coal?

An Up and Down Rollercoaster Ride
 
The U.S. Energy Information Administration (www.doe.eia.gov) had their number crunchers analyze some statistics on the supply and demand of U.S. coal, and the results showed both a record jump and a major dive for the industry. They looked at everything from production to imports and exports, and came up with this analysis:

- Coal production increased by 2.2 percent in 2008, or 24.8 million short tons from the 2007 level, to reach a record level of 1,171.5 million short tons.
- U.S. coal consumption declined in every coal-consuming sector in 2008.
- U.S.coal exports were significantly higher in 2008, while coal imports decreased slightly.
- Total coal stocks increased during the year as some consumers continued to add to their stockpiles.

The U.S. coal industry experienced a record year in 2008, with increased production, prices, and exports. However, domestic coal consumption declined for the year as did coal imports.  Both delivered coal prices and export coal prices continued to increase in 2008, some to record levels.  Coal stocks continued to increase in all sectors.
 
Mixed Forecast Too
 
While 2008 was a banner year for the U.S. coal industry, the outlook for U.S. coal in 2009 is bleak.  With the majority of the world in an economic recession, and increasing competition by other coal-producing countries, the domestic coal industry could see a decline in both coal production and consumption for 2009, as well as lower coal exports.  (See Energy Information Administration's Short-Term Energy Outlook.)
 
Since numbers don't lie, one can reasonably extrapolate that layoffs will be a part of the lower demand for coal. However, coal prices are poised to rebound in the imminent future, as electricity demand is expected to nearly double over the next 30 years. One quarter of the world's coal reserves are found within the United States, and the energy content of the nation's coal resources exceeds that of the entire world's known recoverable oil. Coal is also the workhorse of the nation's electric power industry, supplying more than half the electricity consumed by Americans.

By Rita Henry
Get Mining Jobs, Contributing Editor

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