| What Do Higher Natural Gas Prices Mean for Coal and Utilities? | |
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The Week of June 19 Boosted Coal Producers and Utilities (Continued from Prior Part) Natural gas prices
Natural gas prices increased last week as the demand for cooling due to warmer weather continued to rise. This is the second straight weekly rise in natural gas prices. The Henry Hub spot price increased to $2.81 per million British thermal units, or MMBtu, from $2.76 a week earlier.
During the same period, the front month contract prices increased to $2.82 per MMBtu compared to $2.75 a week earlier.
Why are these indicators important?
The shale gas boom led to a massive rise in production and a fall in natural gas prices. As a result, natural gas became a competing fuel for coal. It ate away market share from coal in electricity generation.
Natural gas prices and coal’s market share in electricity generation are related. When natural gas prices rise, coal gains market share. It becomes more economical to burn coal for power generation. A fall in natural gas prices generally leads to a drop in coal’s market share, as natural gas is available at cheaper rates.
Impact on coal and utilities
A rise in natural gas prices is positive for coal producers (KOL) like Alliance Resource Partners (ARLP) and Natural Resource Partners (NRP), as natural gas becomes more expensive as a fuel in electricity generation compared to coal. For utilities (XLU) such as PG&E (PCG) and Southern California Edison (EIX), the impact depends on the level of regulation. If their contracts are strictly on a cost-plus basis (they get a fixed return over and above costs), the impact isn’t significant. For utilities with fixed-price contracts (they get a fixed price irrespective of changes in input costs), the rise in natural gas prices is negative.
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Natural Resource Partners L.P.
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CODE : NRP |
ISIN : US63900P1030 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Natural Resources Partners est une société de production minière basée aux Etats-Unis D'Amerique. Natural Resources Partners détient divers projets d'exploration en USA. Son principal projet en exploration est D.D. SHEPARD en USA. Natural Resources Partners est cotée aux Etats-Unis D'Amerique. Sa capitalisation boursière aujourd'hui est 1,1 milliards US$ (1,0 milliards €). La valeur de son action a atteint son plus bas niveau récent le 24 juillet 2020 à 10,00 US$, et son plus haut niveau récent le 26 avril 2024 à 91,73 US$. Natural Resources Partners possède 12 241 602 actions en circulation. |