Gas-fired power plants will raise electricity prices
By 2040, U.S. households will be getting more of our electricity from natural gas than from coal, the federal government predicts. That may not be good news for tens of millions of Americans.
Just a few years ago, more than half the electricity generated in this country came from coal-fired power plants. That already has dropped significantly.
By 2040, just 32 percent of the nation’s power will come from coal-fired generating units, the U.S. Energy Information Administration predicts. Meanwhile, about 35 percent of electricity demand will be filled from natural gas-fueled plants, the EIA adds.
Much of that increase will be due to pricing, EIA analysts say. “Projected low prices for natural gas make it a very attractive fuel for new generating capacity,” the agency noted in its “Annual Energy Outlook” report.
That is not an honest analysis, however. Coal remains cheaper than gas to generate electricity. But, as we reported earlier this month, U.S. Environmental Protection Agency requirements have driven the cost of building new coal-fired plants up to the point that gas units are less expensive to build.
Given President Barack Obama’s campaign to wreck the coal industry, intelligent utility executives are closing old coal-fired plants and putting new gas units on their drawing boards.
If large numbers of gas-fired generating stations are built, they will consume an enormous amount of the fuel, however.
That will drive prices up substantially.
It may surprise you to learn that gas prices – in the midst of the most extensive well drilling boom in recent memory – have increased dramatically. We have more gas, but also more demand for it.
According to the EIA, spot prices for natural gas during mid-December 2011 averaged about $3.03 per million BTUs of energy-generating ability.
But by the middle of this month, just two years later, the average spot price was $4.21 per million BTUs – a 39 percent increase.
Look for that trend to continue, and possibly to accelerate as demand for gas at power stations increases.
There is no reason to question the EIA’s prediction for the increased use of gas to generate electricity. But for the millions of Americans accustomed to reasonably priced power from coal, there is no reason to celebrate, either.