After losing a big chunk of market share to natural gas, coal is expected to snatch back some of its share as producer of domestic energy.
That's according to data from the Energy Information Administration's newly released short-term energy outlook. The turnabout, said EIA Administrator Adam Sieminski, is due to an increase in natural gas prices.
"An expected increase in natural gas prices this year contributes to a drop in natural gas use for U.S. electric power generation, and an increase in output at coal-fired power plants," Sieminski said. "Coal's share of U.S. electricity generation is forecast to rise to nearly 40 percent in 2013 from just over 37 percent last year, but still be less than coal's 42 percent share in 2011."
A glut of natural gas supplies due to increased domestic production in plays such as the Marcellus Shale and Utica Shale regions has kept prices low. The low gas prices have made it increasingly difficult for coal to compete in the electrical generation market, although it still remains the dominant producer of U.S. electricity.
"The rising cost of natural gas is expected to reduce its share of U.S. electricity generation to 28 percent his year from just over 30 percent last year, but that's higher than its nearly 25 percent share in 2011," Sieminski said.
Coal production has continued to decline. Total production is down bout about 9.9 million short tons from the first quarter of 2013 to the previous quarter. Much of that decline was experienced in the Western region, though coal production in Appalachia also fell about 6 percent.
Coal consumption is expected to increase from 889 million short tons in 2012 to 957 million short tons by 2014. The consumption of coal in electricity plants is expected to increase due to a rise in natural gas prices that have recently hovered at record lows.
"Coal production is expected to increase by 0.5 percent in 2013 as primary and secondary inventory draws, combined with an increase in coal imports, meet most of the growth in consumption," EIA's short term energy outlook projects. "Coal production is forecast to grow by 2.0 percent in 2014."
A colder-than-expect March accounted for underestimated consumption of natural gas. The weather significantly increased the EIA's expected use of natural gas in 2013.
"Unusually cold temperatures in March led to larger-than-expected withdrawals of natural gas from storage," Sieminski said. "The 94 billion cubic feet of gas pulled out of storage for the week ending March 29 was the largest net withdrawal for this time of year since EIA began its weekly storage data collection in 2002."