Oil & Gas

Natural gas surpasses coal in US power generation


More Americans are generating electricity through natural gas than ever before. More Americans are generating electricity through natural gas than ever before.

The U.S. generated more power via gas than coal this April for the first time in history. According to the Financial Times, this is largely due to notable and continuing decreases in oil prices across the nation. 

Americans favor natural gas over coal
Overall, 31 percent of American electricity was produced using natural gas, while 30 percent of the nation's energy was created using coal. While this was the first time gas has ever surpassed coal as the most popular form of power generation, it came close in 2012 when gas prices appeared to be headed for similar declines to those that are visible today.

Just five years ago, however, coal was more widely used, fueling around 45 percent of the country's power, reported The New York Times. During this period, gas accounted for just 22 percent of the nation's energy. Between April 2014 and April 2015, natural gas use expanded nationally by 21 percent, while coal use dropped by 19 percent. 

"The U.S. is the world's largest producer of natural gas."

The New York Times explained that today's falling gas prices can be connected to a drilling boom that began in 2008. This practice has increased production of natural gas in the U.S. by around 30 percent, allowing the country to become the world's largest manufacturer of natural gas and oil, surpassing countries like Russia, China and Saudi Arabia. The Financial Times noted that shale gas, or natural gas accessed by methods like horizontal drilling, combined with increased restrictions of coal-fired power generation practices, have also contributed to gas' popularity. 

Coal sector negatively affected 
The coal industry is seeing major financial changes as a result of increased gas use. The Financial Times explained that, by the end of this year, economists predict coal production will have fallen by nearly 8 percent. There are far fewer coal plants running today than there were in 2009, and the plants that continue to exist operate far less frequently than they did six years ago. 

The shift toward natural gas is also apparent in coal stocks, which have experienced major changes over the past few years. The source noted that shares for U.S. organizations Peabody Energy, Arch Coal and Alpha Natural Resources have fallen by 98 percent, 99.2 percent and 99.6 percent, respectively, over the past four years.