EIA Confirms More Natural Gas Used for Electricity Generation

May 31, 2012 6:57 AM EDT
The price of natural gas futures are trending lower overnight, with the price of falling below $2.40. The natural gas ETF, United States Natural Gas (NYSE: UNG), which tracks the futures, is expected to open lower on Thursday morning.

The sell off comes despite a US EIA reports that U.S. power plant consumption of natural gas rose 40 percent in March. At the same time, coal's share of power plant consumption fell 20 percent, confirming industry trends that suggest that the lower price of natural gas is prompting utilities to switch from coal to the cleaner burning, cheaper gas.

Gas used in electricity generation rose to 703.3 bcf in March from 503.9 bcf from a year earlier. This is an increase of approximately 6.5 bcf per day, which exceeds both January and February usage.

U.S power generation was lower in March of 2012 vs. March of 2011. Natural gas accounted for 30 percent of electricity during the month, up from 21 percent compared to 2011, while coal accounted for 34 percent vs. 42 percent in 2011.

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