The Impact of Shale Gas on the US Power Market - Emerson Automation Experts

The Impact of Shale Gas on the US Power Market

Here in the U.S., shale gas is creating jobs, reducing energy costs, and even adding to the revenue coffers at the local, state, and federal levels. Emerson’s Alan Novak, Director of the alternative energy and mining and metals industries, highlights its impact on power generation.

Emerson's Alan NovakIn previous posts, we have discussed the potential impact of the US shale gas boom on various industries and the global energy market. It is also having a significant impact in its more traditional role as a fuel for power generation.

A recent Wall Street Journal article “Coal-fired Plants Mothballed by Gas Glut” highlights the challenges facing US power generators with large coal-based fleets. Coal-fired plants that were designed to run continuously and provide a base load to the power grid are, in some cases, being forced into intermittent operation due to the low cost of natural gas.


This is also reflected in power generation statistics from the US Energy Information Administration (EIA),


…and in US coal consumption data from the same source.


Cheap gas has not however shut down the US coal industry however; it just means that more is available for export.


So what does this mean long term for the US power market?

That picture is far from clear. In just the last week, the US Energy Information Administration issued its September Short-Term Energy Outlook with a cautionary note regarding the dash to gas: “Because of the projected increase in natural gas prices relative to coal, EIA expects the recent trend of substituting coal-fired electricity generation with natural gas generation to slow and likely reverse over the next year.”

And its projections for 2013 show coal generated electricity gaining, rather than losing, market share.


Will increasing demand drive up the price of natural gas in the US? Only time will tell—but if it does, the impact will be felt well beyond the US power market.


  1. According to wikipedia (

    Conventional crude oil production, those having Net Energy Gain above 10 stopped growing in 2005 at about 74 million barrels per day (11,800,000 m3/d). The International Energy Agency’s (IEA) 2010 World Energy Outlook estimated that conventional crude oil production has peaked and is depleting at 6.8 per cent per year[citation needed]. US Joint Forces Command’s Joint Operating Environment 2010 issued this warning to all US military commands “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day.”

    Natural gas from shale will be in higher demand after 2012 as more countries are going for natural gas, coal, nuclear and other alternative energy for power generation.

    The fear is how long before shale gas will peak in their “production”, we can use better technology to “extract” shale gas however any natural resources will eventually peak. (Running on fumes)

    There’s also the worry of over initial estimation of shale gas reserve by companies.

    The good news is the governments are looking into harvesting resources from asteroids and other planets if any but that may take many years or even decades to be finalised.

    My prediction on natural gas is that it will spike in prices once crude oil goes belly up in political tension in the straits of hormuz and fluctuate wildly due to economic recession & “recovery” (inflation).

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