From a production and pricing standpoint, last year turned out to be a good year for most U.S. coal operators. Preliminary figures for the Energy Information Administration indicated total U.S. coal production for 2021 should reach 580 million tons, an increase of more than 40 million tons (nearly 8%) over 2020. This month, Coal Age publishes the U.S. Longwall Census, and coal production from U.S. longwalls grew by more than 21 million tons. Spot prices for thermal coals from most of the U.S. regions remain high (see Weekly Spot Prices, p. 7) and spot prices for metallurgical-grade coals are significantly higher than thermal prices. Coal-fired power generation in the U.S. increased 20.9% year-over-year as total power demand increased 4.4%.

Coal production, as Coal Age documented last month, continues to grow worldwide. For the first time, China’s output eclipsed the 4-billion-metric-ton (mt) level. China reported that its coal production for 2021 increased 4.7% to 4.07 billion mt (or 4.48 billion tons). Yes, that is nearly eight times the level of the U.S. China’s 2021 power consumption rose 10.3% year-on-year. The story is the same for almost every major coal-producing region (India, Indonesia, Australia, etc.)

Increased demand for energy and a lack of fuel supply diversity is driving energy prices higher. On a dollar-per-million Btu basis, spot prices for coal are high, but natural gas is nearly triple that figure in the U.S. and even higher for Europe and other natural gas importers. While this is good news for miners and other workers employed in the energy field, it’s bad news for the economy and consumers. Increasing energy costs are contributing to inflationary pressures and driving costs for goods and services higher.

Energy has become a focal point for many conversations, whether its Russia’s leverage over Germany or where the electrical grid will fail in the U.S. this winter. Had people been more informed energy-wise, these situations could have been avoided. Policymakers played favorites with fuel for power generation and selected natural gas and renewables as the path forward. Now, society is charting an all-electric course without giving much thought to how it will generate that electricity.

The time has come for the energy industry to recalibrate. It’s already evident that the world’s growing appetite for electricity will only be satisfied by using all available fuels. That electricity should be generated as cleanly as possible, but it also must remain affordable. Coal could play a pivotal role in providing for tomorrow’s energy needs while holding inflationary pressures at bay by serving as a hedge against swings in natural gas prices and availability.