High gas prices push US coal demand: EIA
A US federal report published August 10 estimates that natural gas consumption will decline in 2021 because of elevated commodity prices.
The Energy Information Administration (EIA), part of the US energy department, estimates that domestic natural gas consumption will be about 1% below levels from 2020 because of higher energy prices.
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Henry Hub, the US natural gas price, was trading around $4.08/mn Btu, the highest level since late 2018. In its Short-Term Energy Outlook for August, the EIA estimated that domestic coal consumption in the electricity sector will be higher than 2020 levels by 17% because “of relatively high natural gas prices that make coal more competitive for dispatch in the electric power sector.”
US president Joe Biden has laid out ambitious climate goals for the economy, though economic expansion and subsequent inflation so far in 2021 have led to multi-year highs for natural gas and crude oil prices. Gas consumption is, however, expected to expand next year.
On the supply side, EIA estimates dry natural gas production will average around 92.9bn ft3/d during the second half of the year, about 1.6% higher than in the first half. Production levels next year are estimated at 94.9bn ft3/d.
The EIA said that natural gas and crude oil prices next year will support production growth.
With coal-fired power on the rise, and following a critical report on climate change from the UN, EIA estimated energy-related emissions of CO2 will be 7% higher in 2021 than year-ago levels and increase another 1% in 2022.