EIA: natural gas use for power falls as industrial use continues to rise; higher prices, cooler summer
04 December 2013
For the first eleven months of 2013, natural gas consumption in the electric power sector was below 2012 levels because of relatively higher natural gas prices compared with coal prices, and cooler summer weather compared with 2012, according to the US Energy Information Administration (EIA).
EIA estimates that electric power sector natural gas consumption was, on average, down by 13% so far in 2013 (through November), relative to the same time period in 2012. By contrast, industrial sector natural gas consumption in 2013 was up 3% compared with 2012.
Changes in electric power sector consumption of natural gas are primarily attributable to commodity prices, EIA said. For the first eleven months of 2012, the benchmark natural gas spot price at Henry Hub averaged $2.70/MMBtu. For the same months in 2013, the average Henry Hub price was $3.68/MMBtu, somewhat higher than the previous year’s levels, lowering electric-sector demand for natural gas. Gas is still being consumed at rates generally above the 2007-2011 range.
Electric power plants are dispatched based on their variable cost of operation, which is determined by both the price of the power plant’s fuel and the efficiency of the plant.
Demand for air conditioning is one of the major drivers of summer peak electricity loads, which typically require the highest amounts of gas-fired generation. Air conditioning demand is closely related to the number of cooling degree days (CDDs), a measure that reflects both the level and duration of high temperatures. In addition to less gas per CDD being consumed in 2013 versus 2012 because of the price effects mentioned above, there was an overall reduction in CDDs this year.
July and August— typically the hottest months—both saw substantially fewer CDDs in 2013 than in 2012, EIA noted. This cooler weather further reduced electric-sector demand for natural gas compared with last year. As a percentage of total natural gas end-use consumption across all sectors, the electric sector has accounted for 35% so far in 2013 (through November), down from 40% in the same months of 2012.
Continuing the trend from earlier in the year, industrial gas consumption was up 0.6 billion cubic feet per day (Bcf/d), or 3%, through November 2013, compared with the same months in 2012. Nearly all facilities with the ability to switch from oil to natural gas as a fuel or feedstock made this change before 2011, given the large cost advantage of natural gas.
Lower natural gas prices in the United States relative to those in Japan and Europe have made U.S. energy-intensive industries more competitive globally, allowing them to capture a larger share of global markets. New industrial demand for natural gas is expected to continue to grow as additional manufacturing capacity in gas-intensive industries comes into operation.
The same could happened to CNG vehicles if the price of CNG becomes as high as gasoline and diesel fuel.
One way to stop the run towards the all mighty cheapest would be with an energy-fuel tax based on pollution and GHG created and environment clean up cost.
For example, electricity from coal and nuclear power plants could be taxed more ($0.05/kWh) than from NG plants ($0.04/kWh) and a lot more than from clean Hydro/Sun/Wind sources ($0.00/kWh).
Revenues should go into a special environment clean up fund.
Posted by: HarveyD | 04 December 2013 at 07:28 AM
Nuclear plants don't create any signficant clean-up cost in normal operation. Their emissions are of little or no environmental concern and disappear by themselves over time. Taxing them for "pollution" is just to designate the "approved green" suppliers as the winners.
Posted by: Engineer-Poet | 04 December 2013 at 10:02 AM
@ EP
Do you have even a faint idea of the cost and effort to renaturate a former nuclear plant? Proper disposal of nuclear wastes and fuel rods?
A former nuclear plant is being renaturated in Germany at a forecast timetable of approx. 30 years. That'll really be cheap! All these expenses should be added to the monthly power bill of all nuclear proponents and not left up to the taxpayer in general.
Posted by: yoatmon | 04 December 2013 at 10:18 AM
It was done about 30 miles from where I'm sitting now. Seems to have worked fine. I wish they'd re-use the site for a couple AP1000's and clean up the state's power supply some more (currently about 30% carbon-free nuclear).
By "disposal" do you mean "irretrievable dumping" or "resource separation and recovery"? Because PROPER disposal means the latter, and about 95% of the available energy remains in "spent" LWR fuel. Even some of the fission products have worthwhile uses (as I said, I'll take 10 kg of Sr-90 in a stainless capsule any time, just give me a week's notice before you deliver).
Most of the delay is just sitting, to allow the neutron-activated cobalt in the reactor vessel to decay (HL 5.7 years). This cuts the gamma exposure of the dismantling crew by about a factor of 40, which means far lower radiation-protection costs. Or do you think the decomissioning workers shouldn't have their safety looked after?
I'll take that if you'll take all the costs of climate-change from all the natural gas and lignite that the backups for your precious "renewable" generators still require to keep the grid from blacking out.
Posted by: Engineer-Poet | 04 December 2013 at 11:45 AM