Coal Costs

In a world with increasingly volatile energy costs, coal provides a stable and reliable source of fuel.

Prices by Energy Type (1970 - 2000)

As with any commodity, the abundance and availability of an energy source determines its price in the free market. With over 275 billion tons of recoverable reserves (a 250 year supply at current use levels) and approximately 1,400 operating mines, coal in the United States is clearly both abundant and readily available. As a result, its price remains low in relation to other fuel and energy sources.

Volatility

In addition to supply advantages, coal is also a desirable fuel due to the fact that its production and use are well understood and the technology required to produce it and convert it into energy is constantly improving.

Prices by energy type: Source: Energy Information Agency

The fact that mines can produce a constant supply, and utilities (and other users) can forecast their use of coal well into the future, aids in providing stability to the market and helps lessen price volatility. Additionally, mining techniques are well understood and are being continually enhanced.

Coal Mining Productivity (1949 - 2004): Source: Energy Information Agency

The stability offered by stable demand, improving efficiencies and decreasing costs of production adds to the solidity of supply. Together those factors ensure that pricing of coal remains stable when compared with other fuels that will often experience shortfalls in supply and price volatility.

Employee Well Being

Another key reason for coal's stability and affordability is the productivity and safety of coal industry employees. By every standard, the welfare and productivity of coal industry employees has improved dramatically over the past several decades. As the figure below shows, over the past three decades employee productivity and overall production have increased dramatically, while injuries, time lost and fatalities have all decreased.

Productive employees, who are working in a safe environment will play a key role in ensuring abundant and affordable coal supplies.

MSHA - Injury Experience and Worktime Data: Information Source: MSHA

It Just Makes Sense

Whereas people in developing nations still often rely on open fires and physical effort to power their homes and drive their industry, people in developed countries rely on automation and electrical power. With electricity, we North Americans heat our homes, power our computers, charge our cell phones and operate our appliances. With it, we also power the production of a myriad of consumer products. The need for abundant, inexpensive electricity has become an essential aspect of the North American lifestyle.

Additionally, less expensive energy, that is supplied reliably, will allow industry to produce less expensive products. Those products can then be sold for less in the market, bringing prices down for end users.

Putting it more simply, lower energy costs benefit everyone by reducing our direct and indirect costs. Since we rely so heavily on electricity, it makes sense that when we can find less expensive energy sources, we will be able to meet our energy needs while freeing up our financial resources for other uses.

When considered in the context of fuel and energy costs, the economic case for using coal is easily supported. Relative to other fuels, coal is among the most abundant and the least expensive of any fuel source (whether considering fossil, renewable, nuclear, or others). By encouraging the use of coal, we avoid volatility in fuel and production costs and keep our electricity prices low.

Using coal just makes sense.

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