Final answer:
The relationship between coal demand and weather severity ties to increased coal use during severe weather for heating and electricity, while good weather affects supply levels. Coal's overall decline is more related to the shift towards natural gas for electricity. The accountant must consider these demand patterns in their analysis.
Step-by-step explanation:
At Bintong Chen Coal Distributors, Inc., there is a noticeable relationship between the demand for coal and weather severity as indicated by the U.S. Weather Bureau. Severe weather conditions, such as extremely cold temperatures, typically increase the demand for coal due to its use in heating and electricity generation. On the contrary, good weather can have an effect on supply levels rather than demand; however, in relation to coal, it is the change in demand driven by weather that is most notable. For instance, during milder winters, the need for coal-powered heating decreases, leading to a reduction in coal demand. Similarly, during very warm periods, demand for electricity for cooling can also affect coal consumption though this is often mitigated by the increased reliance on natural gas for electricity, as outlined in Chapter 7 of your reference material.
Coal's decline in demand over recent years is more extensively tied to the switch towards natural gas, as it has become a more popular source for electricity generation. The accountant at Bintong Chen Coal Distributors, Inc. would, therefore, have to consider these factors when analyzing demand patterns and weather severity index correlations.