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The Shift to Western Coal

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The U.S. coal industry has taken on an increasingly important role in recent years as a source of energy. The Organization of Petroleum Exporting Countries (OPEC) has increased the price of oil 15- fold since 1973, making coal a lower-priced alternative. For example, the delivered cost of oil purchased by electric utilities in 1982 has averaged $4.81 per million Btu's, while coal has cost $1.65 per million Btu's. The prospect that oil will become more scarce as energy demand grows also increases coal's attraction, because it is a much more abundant mineral. Moreover, the embargo that some OPEC nations imposed on oil shipments to the United States in 1973-74 made Americans realize the importance of this nation's domestic coal reserves.

The U.S. coal industry has taken on an increasingly important role in recent years as a source of energy. The Organization of Petroleum Exporting Countries (OPEC) has increased the price of oil 15- fold since 1973, making coal a lower-priced alternative. For example, the delivered cost of oil purchased by electric utilities in 1982 has averaged $4.81 per million Btu's, while coal has cost $1.65 per million Btu's. The prospect that oil will become more scarce as energy demand grows also increases coal's attraction, because it is a much more abundant mineral. Moreover, the embargo that some OPEC nations imposed on oil shipments to the United States in 1973-74 made Americans realize the importance of this nation's domestic coal reserves.


Suggested citation: Anderson, Gerald H., 1982. “The Shift to Western Coal,” Federal Reserve Bank of Cleveland, Economic Commentary, 10.18.1982.

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