Natural Gas Nears Victory Over Coal
30 Mar 2016
Natural gas has been waging a war on coal for more than a decade, and this is the year it plants the flag.
Another wave of coal plants retired in January, and more are likely to go at a “vigorous pace” throughout the year, analysts at Guggenheim said this morning. The power sector is burning more gas instead because it is cheaper and cleaner, and it is becoming so reliant on the fuel that its gas consumption set a record in January even while gas futures had a brief rally.
Gas gained 3% in market share in January, while coal lost 5%, Guggenheim notes based on recently released government data.
Coal hasn’t made a year-over-year gain in market share since March 2014, likely an anomaly. Extreme cold weather caused record power demand that winter, while simultaneously making natural gas hard to get for power plants.
Yet for about a decade, gas has been gaining on coal, with few reasons left for that pattern to change.
“Long-term trends are clear,” Guggenheim says.
The U.S. Energy Information Administration recently forecast that 2016 will be the first year that the country uses more natural gas than coal to burn for power. Gas prices fell steadily throughout 2015 and U.S. power plants first consumed more gas than coal on a monthly basis in April. As prices kept falling gas and coal have become nearly equal. EIA says gas will provide about 33% of the country’s power in 2016 compared to 32% from coal.
Source: wsj.com