(Source: Seeking Alpha, October 16, 2012)
Natural gas prices have started to move upwards in recent weeks. The trend is expected to continue, and as natural gas prices increase, it will lose its competitive edge against coal. When the natural gas price fell below $3, there was a notable coal to natural gas switch. However, natural gas prices in the range of $3 to $3.5 make coal to gas switching unattractive. The gas price is heading towards $4, which would mean that dependence on natural gas for electricity generation would decrease. It is difficult for natural gas price to go above $4.5 to $5 given the excess supply due to hydraulic fracturing.
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