Coal Prices

Even though it was not a great year for coal consumption in 2008, domestic coal prices continued to increase in 2008 rising for the fifth consecutive year. Two factors drove the increase: increases in fuel surcharges by the transportation sector in response to the large rise in oil prices, and the dramatic rise in the eastern coal spot market prices in response to the increased demand internationally for U.S. coal.

The majority of coal sold in the electric power sector is through long-term contracts, in conjunction with spot purchases to supplement the demand. Also, the majority of the coal is transported from the mine to the electric generating facility by train, barge, truck or a combination of these methods. All of these transportation methods use fuel oil and as a consequence of the rapid increase in oil prices through most of the year, higher fuel surcharges increased the delivered price of coal. According to preliminary data for 2008, coal prices at electric utilities (a subset of the electric power sector) increased for an eighth consecutive year, to $41.23 per short ton, an increase of 14.3 percent over the 2007 price. Coal prices at independent power producers for 2008 increased to $39.31 per short ton, an increase of 18.7 percent. The average delivered price of coal to the other industrial sector increased by 16.6 percent to an average price of $63.44 per short ton in 2008. In 2008 the delivered price of coal to U.S. coke plants increased by 24.3 percent to reach an average price of $118.09 per short ton (Figure 7).

Figure 7. Delivered Coal Prices, 1999-2008 (Nominal Dollars)