Coal Boom

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World demand for coal has climbed 30% in just six years as developing economies have begun screaming for more energy. The United States is rapidly running out of production and shipping facilities to meet the demands of domestic and foreign demand, causing coal prices to skyrocket even faster than oil prices have. On the plus side, the coal boom has helped improve the US trade deficit with the value of exports increasing some 19% last year. 

In the United States, the boom in coal exports and prices has helped lower the trade deficit, which declined last year for the first time since 2001. The value of coal exports, which account for 2.5 percent of all U.S. exports, grew by 19 percent last year, to $4.1 billion, the National Mining Association said. An even bigger increase is expected this year.

That means that, in a small way, higher revenues for U.S. coal exports indirectly helped the U.S. economy cover the cost of iPods from China, flat-screen TVs from Japan and machinery from Germany. The still-gaping trade deficit of the world's largest industrial power at the dawn of the 21st century was slightly eased by a fuel from the era and pages of Charles Dickens.

Big swings in the prices of coal and other commodities are common. But while the price of coal has slipped slightly in recent weeks, many analysts and companies are wondering whether high prices are here to stay. As increasing numbers of the world's poor join the middle classes, hooking up to electricity grids and buying up more manufactured goods, demand for coal grows. World consumption of coal has grown 30 percent in the past six years, twice as much as any other energy source. About two-thirds of the fuel supplies electricity plants, and just under a third heads to industrial users, mostly steel and concrete makers.

Meeting rising demand will prove difficult. To maintain its role as the world's producer of last resort, the United States will need to make major investments in mines, railways and ports.

"We think the current world markets have legs," said Thomas F. Hoffman, senior vice president of external affairs at Consol Energy, one of the biggest U.S. coal producers. Consol is trying to decide whether to expand output at its Appalachian mines and to add capacity in Baltimore's harbor.

"We're at a point where we're running through the capacity," said David Khani, a coal analyst at Friedman, Billings, Ramsey Group. He compares the coal market to the oil market. For coal, he added, "it is unprecedented." 

Bad news for American electricity prices, incidentally. Half of the US electric supply is generated with coal. On a somewhat brighter note, the Florida Public Service Commission has just approved the construction of two new nuclear units at Florida Power and Light's Turkey Point facility. Unfortunately, those will take more than a decade to bring on line.

Florida regulators have approved Florida Power & Light Co.'s petition to build two new nuclear plants at its Turkey Point facility.

The state Public Service Commission determined that there is a need for the additional power.

Turkey Point, located south of Miami, currently has nuclear units, two gas and oil units, and one natural gas unit. The two new nuclear units would come online in 2018 and 2020, and contribute between 2,200 megawatts and 3,000 megawatts of new generation, the PSC said.

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4 Responses to Coal Boom

  1. MAJ Gross says:

    I think you speak in error. Our exports didn’t increase by 19%. Only coal exports increased by 19% and they only represent 2.5% of all exports. You probably already caught that.

  2. Steev says:


    Oil, Gas and now Coal becoming more expensive. Any governing body that opposes nuke energy (idiots in Sacramento) needs to be voted out.

    It’s the last option for inexpensive abundant energy for the U.S.

  3. sam says:

    Increasing coal exports sounds like a good deal to me since I grew up in Wyoming where coal mining keeps the economy humming and taxes low.  Also, a large producer of uranium as well.  And oil and natural gas.But your post also points up something else.  For all the hue and cry about carbon emissions and the need to reduce our carbon footprints, etc., when push comes to shove the electricity needs to come from somewhere.  When the choice comes down to keeping the lights on, or not.

  4. Gaius says:

    The value of the coal exports increased by 19% – that is not their total contribution to all exports.

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