Gas Outdoes Coal Again as America's Favorite Power Fuel

  • Gas biggest power plant feedstock for second month this year
  • Environmental regulations forcing coal plants to retire

For the second time in U.S. records, natural gas eclipsed coal as the primary fuel for electricity generation.

In July, natural gas-fired plants supplied 35 percent of the country’s electricity, just above coal’s 34.88 percent share, the Energy Information Administration said in its Electric Power Monthly report on Thursday. Gas surpassed coal for the first time in April, when it made up 31.5 percent of U.S. generation.

“Right now there’s just this wave of gas production,” James Stevenson, director of North American coal at IHS Inc. in Houston, said by phone Friday. “The one place that gas can get more demand is from the power market and it does that by displacing coal.”

The market battle between gas and coal is escalating as environmental regulations force coal-fired plants into retirement and cheap gas supplies flow out of U.S. shale formations. Gas prices have fallen 10 percent this year to the lowest levels seasonally in at least a decade.

“Peak coal is coming sooner than expected,” Goldman Sachs Group Inc. analysts Christian Lelong and Amber Cai said in a research note Sept. 22. “Thermal coal is still the dominant fuel in power generation worldwide, but we believe the market is going ex-growth.”

U.S. coal-fired power generation is down 13 percent so far this year, while gas consumption is up 20 percent, EIA data show.

A decade ago, coal was used to generate half of all U.S. power supplies. The government estimates that the fuel’s share of electricity consumption will be 35 percent this year, while gas will supply 31 percent.

The electric power sector will burn 789.7 million tons of coal this year, the lowest since 1991, it forecast in its Sept. 9 Short-Term Energy Outlook.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE