July 2012, Vol. 239 No. 7

In The News

Utilities Burn 34% More Gas In February Than Year Earlier

U.S. utilities are burning a record amount of natural gas for generating electricity without triggering a predicted boost to the fuel’s price from near 10-year lows. The power companies used 34% more gas in February than a year earlier, Energy Department data show. Southern Co., among the largest U.S. coal plant operators, is on pace to consume more gas than coal in 2012 for the first time in its 100-year history.

The historic switch to gas is set to peak this year without fulfilling industry predictions that it would eat up inventory and drive up gas prices. Gas consumption averaged 5 Bcf higher at power plants this year through April 10 compared to year-ago levels, Credit Suisse analyst Arun Jayaram said. He predicts increases will ultimately slow to an average of 3 Bcf/d this year as generators manage abundant inventories of both coal and natural gas.

To make a dent in gas inventories, the power industry will need to burn at least 4.5 Bcf/d on average for the full year above 2011 levels, according to data compiled by Bloomberg. Coal remains the leading source of power in the U.S., but has fallen to 37% of U.S. electricity generated during January and February, combined, from 46% a year ago, Energy Department data show.

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