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Commodity Online

NEW YORK: Steady demand from utilities and surging global demand for coal will push up prices of coal in United States, the one fossil fuel the country has in abundance.

United States is all set to become major exporter for the first time ever since 1990 s thanks to the vast reorganization of global coal trade.

Coal has long been a cheap and plentiful fuel source for utilities and their customers, helping to keep U.S. electric bills relatively low.

With global demand rising for coal, it is becoming another hot global commodity, with domestic buyers having to compete with buyers from countries such as Germany and Japan.

Environmental concerns have forced some U.S. utilities to cut back plans for coal burning power plants.

The prospect of electricity prices shooting up in USA with in a three year period cannot be ruled out if domestic prices of coal were to rise.

Coal and utility executives predict that coal will remain the most economical fuel in years to come. Any significant rise in coal prices could have an important inflationary effect, because coal is used to produce about half the nation's electric power and it is vital in steel production.

Meanwhile, new coal fired power plants have been discouraged by the administration because they they feel it will contribute to greenhouse gas emissions.

The U.S. will export 7 percent to 8 percent of its coal production in 2008, up from about 5 percent last year, analysts said. Because of higher prices, the value of coal exports should double to $3.75 billion.

U.S. exports of coal grew from 49 million tons in 2006 to about 55 million tons in 2007, according to estimates, while domestic production increased by 1 percent. Exports are likely to touch 80 million tons this year.