Natural Gas Outshines Coal Amid War-Driven Price Shift

The US coal industry is struggling due to low demand and competition from natural gas. Despite federal efforts to support coal, production has continued to decline. In fact, EIA expects power plants to burn 38 million fewer tons of coal this year, a 9 percent drop.

However, the story behind falling coal prices is not just about market forces. A war in the Persian Gulf led to higher oil prices, which in turn prompted drillers to increase production in the Permian Basin. This surge in output helped lower natural gas prices, making it an even more attractive alternative to coal.

The Haynesville field added 9 percent to its output on its own, and total US gas production is on pace for a record 122.5 billion cubic feet per day. Meanwhile, utilities barely touched their stockpiles of unsold coal this summer, as they didn't need it due to the increased use of natural gas.

The federal government's efforts to support coal, including opening up land for leasing and cutting royalty rates, have not been enough to stem the decline. In fact, some argue that these measures are unnecessary, as the market has already made its choice: natural gas is simply cheaper.