Thursday, July 16, 2015

Though gas surpassed coal for electric generation recently, coal is expected to rebound somewhat

News stories this week reporting that natural gas in April overtook coal in U.S. electricity for the first time failed to mention that the Energy Information Administration "said in a May report that it expects the level of coal-generated electricity to rebound as natural gas prices rise later this year and coal-fired plants return from spring maintenance," Ken Ward reports for The Charleston Gazette. "Overall, the EIA expects about 36 percent of total U.S. electricity generation to come from coal in 2015 and 31 percent to come from natural gas."

Ward notes that The Guardian had some interesting thoughts on this development. The Guardian said: "In April a glut of fracked gas from new shale regions drove the price of gas down to just $2.50/million Btu (British thermal unit, a widely-used measure of energy), a 35 percent drop since February. This oversupply, combined with a routine seasonal shut down of coal plants, caused gas production to creep above coal for the first time."

Tyler Hodge, who works on the EIA’s Short-Term Energy Outlook, said "gas prices were expected to rise again in the coming months, and coal would reassert itself at the top of the production table when plants fire up again for the winter," The Guardian reports. Hodge told the British newspaper, “Power generators often use the spring months to take their plants offline for maintenance, especially coal plants. This maintenance period happened to coincide with a period of very low natural gas [prices]."

Even so, the long-term picture for coal, especially in Central Appalachia, is not good, Ward writes. Companies such as Walter Energy, which has mines in Alabama and West Virginia, continue to file for bankruptcy, while other companies are shuttering coal-fired plants or switching to natural gas.

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