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Are you looking for more reasons to start building a long term bullish position in natural gas? How about this Reuters report that U.S. power companies have announced plans to shut or convert about 40,000 MW of smaller, older coal-fired plants over the next few years as cheap natural gas prices and strict environmental rules have made coal the more expensive option in some areas.   Eventually, the switch away from coal may shut 60,000 MW to 100,000 MW of power generation across the country, according to industry estimates. 

Low natural gas prices have depressed power prices to at least 10-year lows in several regions, making it uneconomic for generators to install new environmental controls on their oldest and smallest coal plants.  Those controls are needed to keep the units compliant with the latest flurry of federal and state environmental rules.

There are about 316 gigawatts (GW) of coal-fired power plants in the United States, about 30% of the nation's 1,039-GW generation fleet. The share of generation fueled by coal in 2013 will rise to about 39% from nearly 38% in 2012, then hold at 39% in 2014, the U.S. Energy  Information Administration (EIA) said in its short-term energy outlook in  February. Coal produced over half of the nation's power as recently as 2003. EIA projected the share of generation fueled by gas in 2013 will average about 28%, down from 2012's average of about 30% on forecasts that higher gas prices will prompt generators to burn more coal. In 2014, EIA projects gas used in power generation will slip to slightly below 28%.

Also by Reuters it seems that New York will still be behind the curve on the jobs and advantages of fracking. Reuters reports that   New York State's decision to lift a four-year ban on natural gas drilling faced further delay on Tuesday after officials conducting a key health impact study asked for more time to form their conclusions on the divisive issue. The New York Department of Health, which has been commissioned to study how the drilling process known as fracking affects public health, said the review is ongoing but that a few more weeks are needed because of the "complexity of the issues."

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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