Tuesday, January 2, 2018

Cold weather helps coal

I wrote this last night, figuring I would post it this evening:

“Sometime around the end of this month and toward the beginning of next month, we’ll be hearing from people who are happy this cold snap has hung around as long as it has. Those people are the CEOs of American Electric Power, FirstEnergy, EQT, CSX and Norfolk Southern.

“AEP and FirstEnergy sell electricity. EQT sells natural gas that goes to power plants. CSX and NS haul coal to power plants. Long periods of cold weather mean people use more electricity and/or gas to heat their homes and businesses, so these folks probably are happy. Very happy.”

This evening my email alerts bring news that (a) the U.S. set a record on New Year’s Day for the most natural gas burned in one day, (b) natural gas futures prices today jumped to $3.05 per MMBtu, which makes coal competitive with gas in power generation, and (c) in the PJM electric market region, which includes West Virginia, Ohio, Pennsylvania and parts of Kentucky, Illinois and Indiana, cold weather made coalthe dominant source of electricity again.

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