Moody's was out this morning this stating their belief that coal would not win back any significant market share over natural gas saying....
“Coal will regain a bit of market share as natural gas
prices recover somewhat, but most coal-to-gas substitution to
date will be permanent,” Anna Zubets-Anderson, a Moody’s vice
president and senior analyst, wrote in the report. Production
from shale has boosted gas inventories and coal has faced more
scrutiny from environmental regulators. (More Here)
However, concerns (perceived, real, apparent, or potential) on the reliance of natural gas are starting to be voiced. From the Boston Globe...
Abundant supplies and falling prices have led many power producers
and home and business owners to switch to natural gas in recent years,
but federal energy officials and the operator of the region’s power
grid, ISO New England, say they are concerned that pipeline capacity is
not keeping up with growing demand. In the case of an extended snap of
very low winter temperatures and a rise in heating demand, pipelines
might not be able to transport enough gas for both homes and power
producers, leading to cutbacks in electricity generation and possible
power interruptions, according to a study by ISO New England.
“You have all these stresses and strains being applied
to the gas pipeline that weren’t there before,” said ISO New England
chief executive Gordon van Welie, “and that manifests itself in
reliability problems on the gas supply system from time to time, which
causes reliability problems on the power side.”
The issue also has caught the attention of federal
energy regulators, who hosted a Monday meeting with local leaders in the
power and natural gas industries to discuss possible solutions,
including expanding pipeline capacity, changing the way the wholesale
natural gas market operates, and requiring power generators to keep fuel
reserves.
These concerns are being voiced while natural gas supplies remain over the 5-year average. I think this highlights many officials beyond Wall Street realize that the supply/demand dynamics of natural can change in an instant and that a mix of fuels will be needed to supply our energy needs.
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