Coal prices highest in more than a decade as stockpiles dwindle after hot, dry summer boosted use of electricity

“Coal piles at power plants have dwindled to their lowest point since the 1970s, and the race to build up inventories ahead of heating season has sent domestic thermal-coal prices to their highest levels in more than a decade,” Ryan Dezember reports for The Wall Street Journal. “Inventories in the U.S. power sector are about two-thirds of the five-year average for this time of year, according to the Energy Information Administration. Richard Nixon was in the White House the last time there was so little on hand, EIA data show.”

Extreme weather driven by climate change bears some of the blame: “A lot of coal was burned this summer to power air conditioning during some of the hottest weather on record,” Dezember reports. “The western drought reduced hydropower output, and coal plugged some of the generation gap, along with natural gas. The price of gas, which started out the heating season at its highest in more than a decade, has made switching to coal attractive to power producers that can burn both.”

Most coal is sold in advance, and there isn’t much available to buy for immediate use. “Coal has lost market share to natural gas, wind farms and solar installations over the past decade, drying up financing for speculative production,” and it’s challenging to produce more than previously set quotas, Dezember reports. “Backed up ports and railways would make delivery difficult, even if there were more coal coming out of mines.”

Gas and renewable energy have increasingly crowded out coal’s market share and depressed its production, Dezember reports, “yet coal remains an important source of power generation, serving as a swing fuel to augment other sources when output from renewable sources, like wind farms, is insufficient or natural-gas prices are high, as they are today.”