Coal - Coal In The Domestic Market

Overall Production and Consumption

The EIA noted in its Annual Energy Review 2003 that the nation consumed 558.4 million short tons of coal in 1974. Twenty-nine years later, in 2003, consumption had grown to nearly 1.1 billion short tons. (Figure 4.5 shows the flow of coal in 2003.) The increases in coal consumption were greatest in the electric utility sector, as many existing electric power plants switched to coal from more expensive oil and gas, and many new, coal-fired power plants were constructed in the 1970s.

Coal Consumption by Sector

To make electricity, coal is pulverized and burned to produce steam, which then drives electric generators.

FIGURE 4.3

Each ton of coal used by an electric generator produces about 2,000 kilowatt-hours of electricity. In household terms each pound of coal produces enough electricity to light ten 100-watt light bulbs for one hour.

Electric utility companies are by far the largest consumers of coal today. (See Figure 4.5 and Figure 4.6.) They accounted for 92% of domestic coal consumption, or 1 billion short tons, in 2003. Coal-fired plants produced nearly 22.3 Btu of electricity, or 40% of U.S. electricity net generation, in 2003. (See Figure 1.5 in Chapter 1.)

The industrial sector was the second-largest consumer of coal in 2003, accounting for 8% of coal use (see Figure 4.6), or 85.4 million short tons. Coal is used in many industrial applications, including the chemical, cement, paper, synthetic fuels, metals, and food-processing industries.

Coal was once a significant fuel source in the residential and commercial sector. (See Figure 4.6.) In 1949 these sectors used 116.5 million short tons of coal. After the late 1940s, however, coal was replaced by oil, natural gas, and electricity, which are cleaner and more convenient. By 1970 only 16.1 million short tons of coal were used in the residential and commercial sectors. Since then, residential and commercial coal use has continued to decline, falling to 4.5 million short tons in 2003, or far less than 1% of total coal use.

The Price of Coal

In 2003 the average price of coal fell to $17 per short ton, up slightly from the all-time low in 2000 and only 33% of the 1975 price in real dollars, which are adjusted for inflation. (See Table 4.2.) On a per-Btu basis, coal remains the least expensive fossil fuel. In 2000 the average cost of coal was $1.27 per million Btu, compared with $5.68 per million Btu for natural gas and $4.74 per million Btu for residential fuel oil, according to the Annual Energy Review 2003.