Coal power generation use plunges to decades low usage

Coal fired power plants have seen their lowest percentage of U.S. power generation in nearly 34 years dropping below 40% for November and December of 2011. It was March of 1978 the last time it was this low.

Why is coal usage down? The low price for natural gas, of course. Natural gas prices in January, 2012 were hovering around 10 year lows.

Price futures have dropped 23% just since mid-October of 2011.

The low price of natural gas is actually creating its own problems. Exxon and Shell are dialing back investments in natural gas, particularly overseas. This is due to fracking being found impractical in shale formations in Europe and China. Extraction costs are rising globally and the low prices are not conducive to absorbing those costs. Many companies are now implementing caps on exploration investment until prices recover.

All this just drives home the point that we need an energy friendly administration in place. The U.S. has an abundance of natural gas reserves and it is cheaper and easier to recover than many parts of the globe. Just one more reason for the anybody-but-Obama election which supercedes the anybody-but-Romney campaign on the GOP side. Energy costs always poll as right at the top of priorities for Americans and we are in the midst of a global resources strategy war. With Obama so adamantly opposed to cheap fuel costs due to his ideology, this issue cannot be understated. Increasing the supply here at home where the market can better dictate pricing rather than geo-political events abroad just makes sense.

4 thoughts on “Coal power generation use plunges to decades low usage”

  1. Very interesting. Will coal fired power plants become the next buggy whips? Obama through the EPA is doing everything possible to make coal fired power plants cost prohibitive.

    I don’t know how diverse the natural gas producers are. Certainly the big oil companies are major players. So, promoting demand for NG to replace heating oil in parts of the North-East and as an alternative to gasoline may conflict with their profit motive.

  2. I know that Shell and Exxon are around 50% natural gas these days. I’m in no way an expert on the petroleum business, but I would imagine the profit motive drives them to diversify as much as possible so as to position themselves for the pricing fluctuations and political climate. Dodge will be selling a CNG truck this summer and Chevy this fall. They still face the same issue of not enough public access filling stations. To buy a home use filling station for your garage still takes a $5,000 investment.

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