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U.S. Coal Stocks Plunge To The Lowest Level Since 1997

Rallying natural gas prices this year have increased coal-fired power generation at U.S. utilities which ended the month of August with the lowest total coal stockpiles since at least 1997.

Total U.S. coal stockpiles declined by 13.2 percent in August compared to July, reaching 84 million tons in August 2021, the U.S. Energy Information Administration (EIA) said in its Electricity Monthly Update published on Tuesday.

This is the lowest level of total U.S. coal stockpiles recorded for the month since these data were collected using the power plant operations report beginning in 2001, EIA said.

According to Bloomberg’s estimates, the coal stocks were at their lowest level in at least 24 years.

All parts of the country, except for the Western region, saw an increase in electricity generation from coal in August 2021 compared to the same month in 2020, EIA data showed.

Joe Craft, president and CEO of miner Alliance Resource Partners, summed up the rise in coal demand in an earnings call earlier this week:

“Since our last earnings call, fossil fuel prices have increased dramatically around the world as supply has fallen woefully short of demand. Since the beginning of this year, worldwide LNG prices have escalated fourfold in Asia and Europe.”

This year, annual U.S. coal-fired electricity generation will increase for the first time since 2014, EIA said earlier this month.

Last year, the utilization rate—also known as the capacity factor—of U.S. coal-fired generators averaged 40 percent amid an overall decline in power demand and relatively low natural gas prices. Before 2010, coal capacity factors routinely averaged 70 percent or more.

This year’s higher natural gas prices have increased the average coal capacity factor to about 51 percent, which is almost the 2018 average, EIA said.

Still, the rise in coal-fired generation this year will be most likely a one-off event, as America is retiring coal capacity while wind and solar generation rises. No new coal-fired capacity has come online in the United States since 2013, EIA noted.

By Charles Kennedy for Oilprice.com

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