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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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The Coal Price Crash Isn’t Over Yet

  • Coal prices plunged over winter due to mild weather and falling natural gas prices.
  • Despite the recent collapse in the price of coal, it remains significantly more expensive than natural gas in the United States.
  • In 2022, S. power generation from renewable sources surpassed coal-fired generation in the electric power sector for the first time.

Coal prices in the United States and the benchmark coal price in Australia have plummeted this winter amid milder-than-usual weather and the falling price of natural gas.  

Despite the recent slump in coal prices, they will have to fall even further to become competitive with natural gas for power generation again, according to The Wall Street Journal.

Per data from the U.S. Energy Information Administration (EIA), the average weekly coal spot price in Central Appalachia stood at $88.80 per short ton, and that in the Illinois Basin was at $78.45 per short ton in the week to March 24. Coal spot prices were unchanged from the previous week, but they have plunged by 57% since the beginning of this year.

Warmer winter weather, including in Europe, has alleviated pressure on electric power generation and the call on coal reserve plants in Europe, although some UK coal-fired plants were asked to be on standby at times of peak demand on the coldest days and nights this winter.

Despite the drop in coal prices from the record highs seen last year and at the beginning of this year, prices in the United States have to drop further if coal is to become price-competitive with natural gas. Measured in million British thermal units (MMBtu), the price of Central Appalachia coal was $3.55 per MMBtu last week, above the price of the U.S. benchmark natural gas price in the equivalent amount.

The U.S. Henry Hub front-month futures settled on Wednesday below the $2/MMBtu mark— at $1.991 per MMBtu. This was the lowest closing price since the lockdowns in 2020 and a 64% plunge from a year ago.

Natural gas is not coal’s only competitor in electric power generation. Renewables are eating into coal’s share, EIA data showed this week.

Last year, U.S. power generation from renewable sources—wind, solar, hydro, biomass, and geothermal—surpassed coal-fired generation in the electric power sector for the first time. The share of coal-fired generation fell from 23% in 2021 to 20% in 2022 as a number of coal-fired power plants retired and the remaining plants were used less, the EIA said.

By Charles Kennedy for Oilprice.com


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  • George Doolittle on March 30 2023 said:
    Even at one us dollar per metric ton US coal of any type is over priced...although certainly very valuable...just not of any value for generating electricity upon the entirety of the USA at the moment right now end of March, 2023 and going forward well nigh forever.

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