Friday, August 27, 2010
Low Natural Gas Price Hurts Coal
Coal stocks fell Wednesday as the price of natural gas dropped below $4, making the coal rival an attractive option to fire more power plants.
It's not easy to retool a power plant from one fuel to another, but many plants have both coal and natural gas burners, making it possible to switch back and forth depending on relative prices of the two fuels.
Historically, natural gas has been more expensive than coal, so it tends to be used mostly to meet electricity demand during peak hours. But if gas prices keep falling, power generators could decide to increase their use of gas.
In trading on the New York Mercantile Exchange, natural gas fell 16.5 cents to $3.874 per 1,000 cubic feet.
Shares of Peabody Energy Corp. fell 98 cents, or 2.3 percent, to close at $42.23, after earlier dropping as low as $40.79. Shares of Massey Energy Corp. dropped $1.02, or 3.4 percent, to finish at $29.14; Arch Coal Inc. lost 43 cents, or 2 percent, to $21.98; Alpha Natural Resources Inc. fell 89 cents, or 2.4 percent, to close at $36.44; and Consol Energy Inc. dipped 61 cents to finish at $32.15.
Massey shares have continued to slide since the company disclosed earlier this week that it was cited by federal officials for improperly storing explosives in the West Virginia mine where 29 men died in an April explosion. The company has said there was no link between the explosives and the fatal accident.
Posted by Larry at 2:05 AM