Since 1976, coal has been the least expensive fossil fuel used to generate electricity. During the early 1970s, natural gas was the least expensive fuel used to generate electricity. In 1973 electric utilities paid on the average, about 34 cents per million Btu of natural gas, 41 cents per million Btu of coal, and 80 cents per million Btu of petroleum.¹

However, by 2007, on a dollars-per-million-Btu basis, petroleum was the most expensive fossil fuel ($7.40), natural gas was second ($7.10), and coal was least expensive ($1.78). Although the cost of generating electricity from coal has increased, it is still lower than the cost of generating electricity from either natural gas or petroleum.

For 2007, coal prices rose across every consuming sector.  In particular, the delivered price of coal at electric utilities (a subset of the electric power sector) increased for a seventh consecutive year, to $36.11 per short ton (1.78 dollars per million Btu), up 5.7 percent from the prior year.

Another important use of coal is to produce coke, which is used in smelting iron ore to make steel. The tight specifications needed for coal to produce coke limit the availability of the coal. Thus, as the  world market for metallurgical coal remained tight over the course in 2007, the delivered coal price at U.S. coke plants climbed 2.3 percent, reaching $94.97 per short ton in 2007.

The average mine price of coal increased 4.1 percent over 2006. The average open market mine price, which excludes any transportation and insurance costs, increased in 2007 to $26.20 per ton. Open market coal is sold to companies other than the mining company's parent company or an operating subsidiary of the parent company.

The average U.S. coal export price for 2007 was $70.25 per short ton down slightly from 2006. Coal exports in 2007 totaled 59.2 million short tons, up 19.2 percent from a year earlier.²

The average coal import price for 2007 was $47.64 per short ton, a 3.0 percent decrease from 2006. Total coal imports for 2007 rose to 36.3 million short tons, a slight increase over 2006 but a 19.0 percent increase over 2005.

What is the outlook through 2030? The average mine prices reported in the Annual Energy Outlook include prices for both open market and captive mines.³ According to the Annual Energy Outlook 2009 Early Release, the average mine price of coal, in constant 2007 dollars, rises from $25.82 per short ton ($1.27 per million Btu) in 2007 to an early peak of $30.01 per short ton ($1.47 per million Btu) in 2009. This increase is primarily due to the rising prices of fuel, equipment, and parts and supplies at U.S. coa mines. Following this initial run-up, however, prices are expected to moderate, with a price of $28.94 per short ton ($1.45 per million Btu) projected for 2030.

1. To make meaningful comparisons of different energy sources, you must convert physical units of measure (such as weight or volume) into a common unit of measurement based on the energy content of each fuel. One practical way to compare different fuels is to convert them into British thermal units (Btu). The Btu is a precise measure of energy--the amount of energy required to raise the temperature of 1 pound of water 1 degree Fahrenheit.

2. Coal exports and imports. Source: Exports: Bureau of the Census, U.S. Department of Commerce, "Monthly Report EM 545;" and Imports: Bureau of the Census, U.S. Department of Commerce, "Monthly Report IM 145."

3. Captive coal: Coal produced to satisfy the needs of the mine owner, or of a parent, subsidiary, or other affiliate of the mine owner (for example, steel companies and electricity generators), rather than for open market sale.

More information on this subject can be found in the following EIA publications:
    Coal projections from the Annual Energy Outlook
    Coal prices from the Monthly Energy Review, Annual Energy Review
    Consuming sector coal prices from the Quarterly Coal Report