In New First for US Electricity, Natural Gas Overtakes Coal

In New First for US Electricity, Natural Gas Overtakes Coal

Call it a one-two punch against coal. As global demand for U.S. coal exports continues to sag, domestic demand at power plants has been sliding as well.

For the first time ever, natural gas trumped coal as the top source of electric power generation in the U.S. In April, roughly 31 percent of electric power generation came from natural gas, whereas coal accounted for 30 percent, according to a recent SNL Energy report.

It’s a dramatic difference from April 2010, when coal accounted for 44 percent of the mix and natural gas just 22 percent.

“There’s been a change both from a regulatory and economic perspective in terms of the competitiveness of natural gas,” said Steve Piper, associate director of energy fundamentals at SNL Energy. “The transition from coal has been stunning.

Stunning is right. Coal prices have continued to crater this year, extending a years-long downward trend.

This has been particularly true of coal mined in the eastern U.S. Since the start of the year, Central Appalachian coal (CAPP) futures have plunged nearly 15 percent to roughly $41 per ton; since their 2011 peak, prices have nearly halved. Tepid global economic growth, a stronger dollar, cheap natural gas and expanding U.S. regulations have pressured prices.

Coal breaks down into two categories: utility coal, used to generate electricity at power plants in the U.S.; and export coal, for example, metallurgical coal used by China and developing countries to make steel.

Source: NBC News


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