Forecasting Coal Consumption Trends in the United States

1. Forecasting Coal Consumption In the United States SarojDhital Department of Business and Economics University of Wisconsin-Superior

2. Introduction • Coal is the most exclusively used and most abundant fossil fuel in the United States • Coal Accounts for about 30% of World’s total energy production and consumption • Coal is the only fuel capable of offsetting any shortage of energy created by petroleum • Most Coal producing countries will soon be reaching Peak Coal • Hence, Necessity arises to account for total coal production and consumption

5. Methodology • Collect Data • Develop Model • Combine selected Models • Test for Significance and Errors • Developing Final Forecast

6. Data • Coal Consumption in the US (Million Btu) - CC • Electricity Generation by Coal (million Kilowatt Hours) - EG • Total Inventory of Petroleum and Coal Products (Million USD) - TI • Cost of Coal Receipts at Electric Plants (USD per Btu) - Cost • Unemployment Rate - UR • Decomposed Seasonality Index - DS

7. Data studied but not used • Electricity End Use Consumption • Price Index for Purchasing Fuel • Gross Domestic Products • Elasticity Coefficient for Coal Consumption • Coal Consumption as a percentage of total energy used • Average Temperatures in various Months in US • Average Price of Petroleum Products

8. Model • Winter’s Multiplicative Method • Ft =αAt + (1-α)Ft-1 • 10% Trend, 10% Seasonality, 10% Cyclical Patterns and 12 Seasonal Cycles • Multiple Regression • 5 Independent Variables • CC=β0 + β1*EG + β2*TI +β3*Cost + β4*UR + β5*DS • Combined Model • Multiples Regression of two above mentioned models, forced through the origin • Forecast = β1*Regression + β2*Winter’s

9. Other Model Considered • ARIMA • Box-Jenkins • Linear Exponential Smoothing Model

10. Test of Significance

11. ANOVA Table for regressions

12. Error Analysis

14. Final ForecastDecember 2010: 84234.43 million Btu

15. Thank youAny questions?