Good sign for coal power as natural gas prices rise

It hasn’t been a bad couple of months, relatively speaking, for the domestic coal industry on both policy and market developments.

While coal plant retirements continue and coal production is weak, Republican candidate Donald Trump scored an upset victory in the presidential election. Trump has been skeptical of climate change (despite his recent meeting with former Vice President Al Gore) and has publicly opposed the Obama administration’s Clean Power Plan.

Many observers don’t expect the EPA program, which would have states curb power plant carbon emissions 32 percent by 2030, will survive in the Trump administration.

Meanwhile, in the markets, natural gas prices have been strengthening — even before the November election. It should also be noted that gas price still remain cheap compared to what they were a decade ago. Most experts also expect that gas-fired power plants to continue to take market share from coal power.

The energy futures price for January delivery of natural gas was listed at $3.65/mmBtu Dec. 6 on the Energy Information Administration website.

That’s roughly 42 cents higher than the prompt month price from one week earlier. It is almost $1.47 more than the natural gas price one year earlier.

The gas futures price listed by EIA was $2.77/mmBtu on Nov. 7, prior to the Nov. 8 election date.

Natural gas prices had already started to firm up prior to the election. Back on Oct. 20, the gas price listed by EIA was $3.17. Even on Sept. 21, EIA listed the futures price at $3.05.

As recently as Sept. 19, however, the spot natural gas prices recorded in the Mid-Atlantic and New York City was less than $1/mmBtu.

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Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 22 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants.

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