The US has been hit with endless amounts of bad economic news over the past few months. Yet one energy commodity is giving the US economy some promising news (die-hard environmentalists may want to turn away at this point).
Coal, the much hated environmentally-unfriendly fuel source, has recently turned into a hot global commodity due to rising worldwide demand, which has sent coal prices soaring. Emerging economies like China and India have started to binge on the fuel source and have become unable to sustain their own consumption, making the US a major exporter for the first time since the early 1990s. For years, low cost producers in Australia, China and other countries have been able to grab a bulk of the international coal trade, but now that the US has practically become a low-cost producer, given that the euro and other currencies have gained so much value in relation the greenback, the tables are turning. Good news for the US, bad news for the environment.
To get a better idea of the coal industry and its economic implications, consider the following points:
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Worldwide coal consumption has increased by more than 4% annually, with demand expected to accelerate in the next few years.
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US exports of coal grew from 49 million tons in 2006 to 55 million tons in 2007. Coal executives say they expect exports to hit 80 million this year and to rise to as much as 120 million tons in the next few years.
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The value of coal exports are expected to double to $3.75 billion (US) this year.
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The US holds 27% of the world’s coal reserves, more than any other country (refer below).
The bottom line: A boost in coal exports has the potential to help the ailing US economy.
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Interesting Statistics
World Estimated Recoverable Coal (millions of tons)
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United States: 270,718
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Russia: 173,074
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China: 126,215
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India: 101,903
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Australia: 86,531
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Top 5 Countries who use Coal in Electricity Generation (percentage of coal as fuel):
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Poland: 93%
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South Africa: 93%
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Australia: 80%
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China: 78%
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Israel: 71%
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World Electricity Generation:
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Coal: 40%
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Hydro: 19%
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Nuclear: 16%
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Gas: 15%
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Oil: 10%
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Reference Sources: Financial Post, Energy Information Association, World Coal Institute
