Last week the EIA reported that natural gas-fired power generation will increase by as much as 17% in 2012, while coal is expected to decrease 10%. This shift away from coal and toward natural gas is largely tied to gas’ low price, as well as projections of the impacts of increasingly strict federal regulation on power plants.
In March, natural gas spot prices averaged $2.18MMBtu, their lowest level since 1999. Then on April 11th, the NYMEX May gas futures contract settled at a 10-year low of $1.984/MMBtu [EIA].
Despite low gas prices, some utilities express hesitancy about over-committing to gas-generated power. Last week at The New York Times energy conference, Duke Energy President and CEO Jim Rogers said, “Our greatest challenge is to avoid all gas, all the time.” [The Barrel]
How is natural gas reshaping the power industry? Why might utilities such as Duke Power want to avoid “all gas, all the time”? What assurance is there that plentiful natural gas will be available at low cost?