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Short-Term Energy and Summer Fuels Outlook

Release Date: April 8, 2014  |  Next Release Date: May 6, 2014  |  Full Report    |   Text Only   |   All Tables   |   All Figures


Severe winter weather, increases in oil and grain rail traffic, and track work have combined to constrain coal shipments via rail from Powder River Basin (PRB) coal producers to power generators. Weather disruptions began early in the winter season, with October snowfall disrupting shipments from the PRB. Severe weather continued through the quarter and shipments from the Southern PRB and Colorado/Utah significantly declined.

Increases in other rail traffic have helped to create bottlenecks on western rail systems. According to data from the Association of American Railroads, increased crude oil shipments, primarily from the Bakken shale play, and increased grain shipments have taxed rail infrastructure in the region. Soaring volume on Burlington Northern Santa Fe (BNSF) Corporation's main line in North Dakota, coupled with weather issues, prompted Basin Electric Power Cooperative to move coal in North Dakota by truck for 30 days.

The severe winter weather exacerbated the situation by increasing power demand and depleting coal inventories. Spot purchases of coal, which could aid in replenishing stockpiles, are competing for rail service, as the railroads are struggling to catch up with contracted shipments that have been delayed. Some utilities have reportedly taken coal units offline in order to conserve stockpiles. Coal sourced from other basins, primarily the Illinois and Central Appalachian, may be called upon to help replenish stockpiles.

U.S. Coal Supply

EIA projects coal production will grow 4.1% to 1,024 million short tons (MMst) in 2014. The increase this year is primarily a result of higher consumption. Coal production is projected to fall by less than 1% in 2015 to 1,022 MMst, but Appalachian coal production is projected to decline by 2.7%. Interior production is expected to remain steady, while Western production grows by 0.9%.

U.S. Coal Consumption

EIA estimates total coal consumption for 2013 totaled 925 MMst, a 4.0% increase over 2012. The increase was primarily a result of increased consumption in the electric power sector due to higher natural gas prices. Consumption continues to grow at a rate of 4.2% to 964 MMst in 2014 as electricity demand grows and natural gas prices remain well above their 2012 level. Total coal consumption is projected to decline by 2.4% in 2015, as retirements of coal power plants rise in response to the implementation of the Mercury and Air Toxics Standards, and generation from renewable resources (wind, hydro, biomass, geothermal, and solar) grows by more than 3%.

U.S. Coal Exports

Exports are projected to total 101 MMst in 2014, making it the fourth consecutive year with more than 100 MMst of coal exports. This would be the second time that exports have exceeded 100 MMst for four consecutive years, with the first being from 1989 through 1992. Projected exports fall back to 96 MMst in 2015. Continuing economic weakness in Europe (the largest regional importer of U.S. coal), slowing Asian demand growth, increasing coal output in other coal-exporting countries, and falling international coal prices are the primary reasons for the expected decline in U.S. coal exports.

U.S. Coal Prices

Annual average coal prices to the electric power industry fell for the second consecutive year, from $2.38/MMBtu in 2012 to $2.35/MMBtu in 2013. EIA forecasts average delivered coal prices of $2.35/MMBtu in 2014 and $2.36/MMBtu in 2015.

U.S. Coal Summary
  2012 2013 2014 2015
Prices (dollars per million Btu)
Electric Power Sector 2.38 2.35 2.35 2.36
Supply (million short tons)
U.S. Coal Production 1016.4 984.0 1024.5 1021.6
Imports 9.2 8.9 12.1 10.8
Exports 125.7 117.7 100.8 96.4
Consumption (million short tons)
Electric Power Sector 823.6 858.4 895.1 872.8
Other Sectors 65.6 66.8 69.3 68.7
Total Consumption 889.2 925.1 964.2 941.5
End of Period Inventories (million short tons)
Electric Power Sector 185.1 148.0 131.4 135.4
Total Inventories 238.9 197.5 182.6 188.4

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