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Natural Gas Coal Spreads


       
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Last update: October 16, 2017, 6:35 EDT
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Description

NG-Coal Spreads chart shows the difference between the price of natural gas and the price of two major types of US coal: Powder River Basin coal (PRB or Western coal) and Central Appalachian coal (Eastern coal). The chart also shows the spread between natural gas and the average price of PRB and Eastern coal The spread is important because of coal-to-gas switching effect.

Coal-to-gas switching is a displacement of coal-fired generation by natural gas-fired generation due to short-term fuel price competition. Coal-to-gas switching has a positive impact on total natural gas demand. It occurs because of lower natural gas prices relative to coal. The lower the spread, the stronger is the impact of coal-to-gas switching and the higher is the consumption of natural gas in the Electric Power sector (power burn). This substitution effect is particularly important in summer.

Data is available from February 14, 2012.

Updated weekly.

Source: U.S. Energy Information Administration, Intercontinental Exchange, CME Group, Bluegold Research estimates and calculations

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