Coal prices skyrocket

In year that Wyoming saw a 2.4 percent increase in coal production, it also saw a dramatic increase in prices. At the beginning of 2005, producers in the 8,800 British thermal heating unit “compliance coal” sweet spot of the Powder River Basin were getting about $7 per ton under contract, which makes up about 85 percent of a company’s production, compares with the $5-per-ton range in previous years.

But a combination of coal train derailments out of the basin, disruption to natural gas delivery out of the Gulf Coast and skyrocketing prices for emission credits all worked together in 2005 to jolt coal prices upward. Now, spot market prices for 8,800 Btu Powder River Basin coal are $22 per ton. Typically, higher spot prices are paid for about 15 percent of a mine’s production, because about 85 percent is under contract at the lower rate.

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