06/27/10
“Gas Glut Hastens Demise of Coal”
An article in the June 27, 2010 issue of The Sunday Times (UK) detailed a Booz & Company prediction that a five-year gas glut could speed the death of coal-fired power in Great Britain and aid the recovery by keeping a lid on household energy prices. According to the Booz & Company report, “The Next Cycle: Gas Markets Beyond the Recession,” spot-market prices are likely to remain under pressure for some time while contract prices in European and Asian markets become more structural. In the second half of the decade, the report added, gas is likely to replace more carbon-intensive fuels such as oil and coal in power production, which will lead to price rises. The economic recession is most responsible for an unprecedented reduction in demand during the last two years, and that, combined with a faster than expected expansion in unconventional gas in the U.S., resulted in a global oversupply which sent spot gas prices sharply lower, the Booz & Company report said. An analysis of worldwide supply-and-demand dynamics showed that markets could remain in oversupply until at least the middle of this decade.