The Barrel
As natural gas drops below $2, what does it mean for power?
By Kathy Larsen
Coal will fuel about 38% of US power supply this year, the Energy Information Administration says this week — a somewhat dramatic drop of about 10% from last year and double the decline EIA had projected earlier. Natural gas-fired generation, in bold contrast, will rise a whopping 17% or so this year, almost double the increase the agency had estimated.
It goes without saying that the reason is natural gas. The point is brought home this afternoon, when the NYMEX May gas futures contract settled below $2/MMBtu — at $1.984, the lowest settlement for a front-month contract since January 28, 2002. It seemed so inevitable; the only question has been what day it…