(EnergyAsia, May 15 2012, Tuesday) — Rising substitution by natural gas will help reduce US coal use for power generation by 14% in 2012, according to the Energy Information Administration (EIA).

In its latest short-term forecast, the statistical agency of the US Department of Energy said it expects the power sector’s coal consumption to fall to 800 million short tons (mst) this year, and to remain there for 2013.

The recent sharp decline in natural gas prices to a 10-year-low of less than US$2 per million BTU have encouraged power companies to switch from coal to natural gas.

The EIA said natural gas prices delivered to the power industry fell by 7.5% last year, setting the stage for natural gas use for power generation to rise by about 24% in 2012.

However, the agency expects coal demand for US power generation to rebound by 1.2% in 2013 on weaker coal prices and recovering natural gas prices.

The EIA expects total US coal consumption to fall from just over one billion mst last year to 876 mst in 2012 and 890 mst in 2013. Natural gas consumption will rise from 66.76 billion cubic feet/day last year to 70.17 bcf/d this year and 71.19 bcf/d in 2013.

The agency forecasts US coal production to decline by 10.2% in 2012 on weaker domestic consumption and exports. US coal exports are seen falling around 7% to 100 mst in 2012 and 97 mst in 2013.

The EIA expects the US economy to gain strength, rising by 2.1% in 2012 and 2.4% in 2013 after last year’s 1.7% expansion.