Saroj Dhital Department of Business and Economics University of Wisconsin-Superior FORECASTING COAL CONSUMPTION IN THE UNITED STATES

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

METHODOLOGY Collect Data Develop Model Combine selected Models Test for Significance and Errors Developing Final Forecast

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

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

MODEL Winter’s Multiplicative Method F t = α A t + (1-α)F t-1 10% Trend, 10% Seasonality, 10% Cyclical Patterns and 12 Seasonal Cycles Multiple Regression 5 Independent Variables CC=β 0 + β 1 *EG + β 2 *TI + β 3 *Cost + β 4 *UR + β 5 *DS Combined Model Multiples Regression of two above mentioned models, forced through the origin Forecast = β 1 *Regression + β 2 *Winter’s

OTHER MODEL CONSIDERED ARIMA Box-Jenkins Linear Exponential Smoothing Model

TEST OF SIGNIFICANCE ModelF-StatSignificant FDW Multiple Regression E Winter’s Model -- Combined Model E-69 ElectricityTotal InventoryCost of Coal Unemployment rate Seasonality Index Electricity 1 Total Inventory Cost of Coal Unemployment Rate Seasonality Index

ANOVA TABLE FOR REGRESSIONS

ERROR ANALYSIS ErrorMultiple Regression Winter’s MethodCombined Model MAD MPE-0.05%2.20%-0.05%

FINAL FORECAST DECEMBER 2010: MILLION BTU

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