Bloomberg News

Coal Demand Fell 9.9% in 2012 on Gas and Weather, DTC Says

December 03, 2012

Coal demand in the U.S. fell 9.9 percent in 2012 because of a mild winter and cheap gas that robbed coal of market share for electricity production.

Companies lost about 93 million tons’ worth of demand this year from the warmer-than-average weather and lower natural gas prices, Gordon Howald, senior vice president of the utility group at Doyle Trading Consultants LLC, said at a conference put on by his company in New York.

Coal’s share of electricity demand will be about 37 percent this year, down from 42 percent in 2011, while gas consumption by utilities is expected to rise to 31 percent from 25 percent last year, Energy Department data show.

Utilities retiring coal-fired units meant a loss of 9.5 million tons of use this year, Howald said.

Consumption may rebound next year as the fuel gets about 11 million tons of demand from power companies starting new coal units, as the speed of retirements weakens and as coal recovers some of its allure amid higher gas prices, he said.

On the New York Mercantile Exchange, coal has fallen 11 percent to $61.95 a ton this year. Gas has risen 20 percent to $3.591 per million British thermal units.

Between 2012 and 2020, utilities will shutter 34,700 megawatts of coal-fired generators, Howald said, equal to about 61 million tons of demand. The majority of the closings will happen by April 2015 as the Environmental Protection Agency’s Mercury and Air Toxics Standard takes effect.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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