New energy report shows Trump's efforts to upend the market are futile—coal still headed down
Donald Trump has done everything he can to prop up the failing coal industry, but the latest report from the U. S. Energy Information Administration shows that coal is continuing along the path it’s been following for years … down. Despite a slight increase in US coal exports, overall coal production is down by 9 million tons in the first half of the year. The EIA projects no growth over the remainder of the year—with an increase in production from heavily automated western mines being offset by a sharp drop in the Appalachian region. For 2018, the EIA is forecasting a further decline of 3 percent for the overall coal market. Those numbers should be of particular concern to the industry, because a cold snap at the start of the winter, and a severe heat wave through much of the early summer, has driven up electrical demand … just not demand for coal.
That’s happening despite Trump’s interference in the markets and despite and International Energy Agency report that worldwide investments in renewable energy took a tumble in 2017. That fall in renewable investments has been partly brought about by the same forces that have disrupted coal’s hold on the US electrical market—increasing availability of natural gas—but it’s also being generated by some indecision in the renewables market itself. Steeply dropping prices for solar have brought solar costs in line with, or even below, the cost of wind in many areas, leaving governments who do want to clean up their energy act, unsure of the best way to proceed. Meanwhile, that indecision prolongs the demand for fossil fuels, and governments are actually increasing investments in oil and gas discovery as fracking brings fields that were previously thought “played out” or “uneconomic” back into the game.
On the basis of new investment, this has been a bad year for coal and for renewable energy … as contradictory as it might seem. In the United States, natural gas may seem the big winner over the last decade. In 2000, gas provided less than a quarter of all US electricity while coal generated almost half. But now gas is on top with 32 percent and coal is down to 30 percent. Nuclear power continues to provide about 20 percent of US electricity, and 7 percent comes from hydroelectric dams. Over the next two years, the EIA sees coal dropping two percent.
The year 2018 will mark a milestone for solar, wind, and other non-hydro renewable power sources. In 2017, all those sources came in at just under 10 percent of US electrical markets. This year they’ll top 10 percent for the first time. EIA estimates that number will go to 11 percent next year. While those numbers may seem small, the sharp year-over-year growth of renewables in the US continues. With no sign that solar has come to an end on its price drops, and increased availability of battery systems to “smooth out” supply and demand on these systems, solar can be expected to play a greater role in that mix going forward.
If you’re looking to see what a gallon of gas will cost you over the next two years … don’t bother. The EIA report projects oil prices to be flat to slightly down. However, that’s within a confidence range that goes from less than $40 to over $100 per barrel as production and demand stay extremely close. Political factors, such as production by OPEC, and economic growth in the US or China, could see this value at either end of the projected range.