Coal production is expected to rise in 2017 as higher natural gas prices drive up the demand for coal, according to the U.S. Department of Energy.
Coal production in the U.S. in 2016 was the lowest since 1978, a decline mostly driven by low natural gas prices and decreased demand for coal to be used in electricity generation. Most of the coal produced in the U.S. is used to generate electricity, and in 2016 coal prices couldn’t compete with rock-bottom natural gas prices.
While coal production has decreased in all of the major coal-producing regions of the U.S., some areas were harder hit than others in 2016. Production declined the least in the western region, which includes the prolific Powder River Basin in Wyoming and Montana; there, production has fallen 36 percent since 2008. But coal production in the Appalachian region has fallen 53 percent since 2008, according to the Energy Department. The cost of producing coal in Appalachia is higher, whereas coal production in the Powder River Basin is cheaper and accounts for a majority of the country’s coal.
Over the next two years, production is expected to increase in the West but remain relatively flat in the Appalachian region. But the tables could turn again in 2018, when more natural gas-fired power plants are expected to come online and possibly decrease the demand for coal yet again.