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By Samuel R. Avro on Feb 11, 2009 with no responses

Energy Dept: Coal Consumption to Drop 1.2 Percent in 2009

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Power plants in the U.S. will burn 1.2 percent less coal in 2009 compared to the year before, according to the Energy Information Administration (EIA).

“U.S. real gross domestic product (GDP) is expected to decline by 2.7 percent in 2009, triggering decreases in domestic energy consumption for all major fuels,” the EIA said in its monthly short term energy outlook report released yesterday.

Power plants will burn about 1,029.3 million tons of coal in 2009, compared to about 1,041.3 million tons in 2008, said the EIA.

Electricity demand is also expected to decrease this year bu 0.8 percent, including a whopping decline of nearly 5 percent in industrial sector electricity sales.

Retail and other industrial sector coal consumption is estimated to have declined by 2.2 percent in 2008 and is expected to decline by an additional 13.8 percent in 2009.

The drop in demand is leading coal producers to downsize their extraction operations and lay off workers. And it isn’t only coal workers in the U.S. that are beginning to feel the pinch.

Calgary-based Grande Cache Coal Corp., announced today that it was laying off one third of its workforce and scaling back production by 25 percent.

“The continued uncertainty in the marketplace and further indications of lower demand for coal has led us to our decision to reduce production in the short term,” president and CEO Robert Stan stated in a news release.

The company is a producer of metallurgical coal which is used to produce steel.

As far as a recover is concerned, the EIA is optimistic that economic conditions will improve in 2010.

“Production is expected to fall by 4.4 percent in 2009 as lower total domestic coal consumption is combined with declines in exports and an increase in imports.  Production is projected to increase by 2.5 percent in 2010 as domestic consumption and exports increase with an improving economy,” the EIA said in its report.