Forecasting The Texas Coal Market

The purpose of this paper is to describe an independent study which forecasts Texas coal production, specifically for electric power generation. This study, extending to the year 2000, is justified on the following basis. Texas produces and consumes considerably more electric energy than any other state, has consistently high growth rates in the population and industrial sectors, and has large lignite reserves. Also, since recent forecasts have been criticized as overly optimistic, this study is timely when considering the long lead times required in obtaining new power sources. In the study demand for electric energy was assumed to rest on two dominant factors: 1) overall state of the Texas economy as measured by the Texas Gross State Product (TGSP) and 2) Texas population. Demand models were prepared and tested following a study of several options. A final linear regression demand model with time lags for the two variables was chosen on the basis of good correlations. On the supply side, uncertainties such as impact of nuclear sources, gas-fired cogeneration, and ratio of imported to lignite coal exist. These uncertainties were studied with high and low cases for effects on lignite. Finally a simple supply model was chosen. Results of the study indicate that lignite production in Texas will rise from the current (1984) 40 million tons per year (XTPY) to the range of 77 to 124 MTPY and more probably 100 HTPY in the year 2000.