Closing Coal Plants Unlikely To Affect Natural Gas Prices, Expert Says

As coal plants close around the country, the demand for natural gas is going up. But an expert says it likely won’t have a big effect on Hoosier’s heating bills in the long run. 

Doug Gotham is the director of the State Utility Forecasting Group at Purdue University. He says there are a number of reasons why natural gas prices are up right now.

The weather has been colder. Oil prices are down, which means companies have less of an incentive to drill for both oil and gas. And U.S. markets put less natural gas into storage. But Gotham says little of it has to do with coal plants closing.

“In the long term you’ll see some gradual increases in natural gas prices, but the natural gas supply system has changed dramatically in the last 10 years,” he says.  

Gotham says the U.S. is getting gas from new sources — like shale — and that’s stabilized prices. He says the real determining factors for natural gas prices will be how much industrial users and foreign markets demand it and the price of oil.

“If the price of oil goes up, you see more drilling for that stuff. The natural gas is kind of a by-product, they’ll sell it. And so what ends up happening if oil prices go up, you see more natural gas production,” Gotham says. 

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Right now, oil prices are down. Gotham says the colder than normal winter is likely driving up some Hoosiers heating bills, but he says they’re unlikely to stay high.

Indiana Environmental reporting is supported by the Environmental Resilience Institute, an Indiana University Grand Challenge project developing Indiana-specific projections and informed responses to problems of environmental change.