Thursday, July 23, 2009
Cheap Natural Gas-2?
"'Nobody was talking about $3 gas a year ago,' said James Daly, director of gas and energy supply for Nstar, the utility formerly known as Boston Edison. ... For more than a century, the US has relied on coal to produce the biggest share of its electricity. Coal now accounts for about half of the nation's electricity, compared with about 21% from natural gas. ... This isn't the first time the power industry has embraced natural gas. In the late 1990s, as states deregulated their electricity markets, a new breed of so-called merchant generators built scores of gas-fired plants, ecouraged by rosy supply forecasts and easy borrowing. ... New natural-gas discoveries, however, in Texas, Lousiana, Pennsylvania and elsewhere, have created a gas glut that analysts expect to linger. Energy consulting firm Wood Mackenzie predicts gas prices won't recover until 2015. ... 'We're pulling back the coal throttle,' said Ted Carver, chief executive of Edison International, Rosemead, Calif., which owns several coal-fired plants that sell power on the open market. ... 'There basically is no spot market for coal right now,' adds Jim Thompson, managing editor of the Coal and Energy Price Report in Knoxville, Tenn., a coal-industry newsletter. 'Coal companies are living off their utility contracts'," my emphasis, Rebecca Smith and Ben Casselman at the WSJ, 15 June 2009, link: http://online.wsj.com/article/SB124502125590313729.html.
Coal and natural gas both look cheap to me. Disclosure: I own shares of companies in both industries.