The U.S. Energy Information Agency projects that the price of natural gas will more than double by 2035 measured in constant 2012 dollars. Meanwhile, the same survey projects that steam coal prices will increase by less than 15 percent.
The chart at right was included in the EIA’s Annual Energy Report. Following are key sections of that report.
Natural Gas
The Henry Hub spot price for natural gas in the AEO2014 Reference case is higher than projected in AEO2013 through 2037, with price increases in the near term driven by faster growth of consumption in the industrial and electric power sectors and, later, growing demand for export at LNG facilities. A sustained increase in production follows, leading to slower price growth over the rest of the projection period.
The Henry Hub spot natural gas price in AEO2014 reaches $4.80 per million Btu (MMBtu) (2012 dollars) in 2018, which is 77 cents/MMBtu higher than in AEO2013. After 2020, increases in natural gas spot prices are driven by continued but slower growth in U.S. demand and net exports. The Henry Hub spot natural gas price rises to $7.65/MMBtu in 2040, an increase of $3.28 from 2020 but 4% below the 2040 price projection in AEO2013.
Coal
The average minemouth price of coal increases by 1.4% per year in the AEO2014 Reference case, from $1.98/MMBtu in 2012 to $2.96/MMBtu in 2040 (2012 dollars).
Relative to minemouth prices, the average delivered price of coal to all sectors (excluding exports) increases at a slightly slower pace of 1.0% per year, from $2.60/MMBtu in 2012 to $3.43/MMBtu in 2040.
U.S. coal exports, which have surged in recent years from 50 million short tons in 2005 to a record 126 million short tons (MMst) in 2012, have become an increasingly important source of revenue for both U.S. coal producers and coal transportation companies (primarily railroads and barge companies). In 2012, coal export revenues totaled about $15 billion, representing about 25% of all U.S. coal revenues, despite the fact that coal exports in 2012 represented only 12% of total U.S. production (short tons). In the AEO2014 Reference case, U.S. coal export prices increase by 1.2% per year, to $6.40/MMBtu in 2040.
Electricity
Following the decline of natural gas prices since 2008, real average delivered prices for electricity have dropped consistently (although more gradually) since 2009, to 9.8 cents per kilowatt hour (kWh) in 2012. Retail electricity prices are influenced by fuel prices, and particularly by natural gas prices.
Reliance on natural gas-fired generation remains strong, as a result of additional near-term retirements of coal-fired and nuclear capacity, and natural gas prices continue to influence electricity prices. In the long term, both natural gas prices and electricity prices rise. Electricity prices, which in 2030 are 10.4 cents/kWh (2012 dollars) in the AEO2014 Reference case, compared with 9.9 cents/kWh in theAEO2013 Reference case, continue rising to 11.1 cents/kWh in 2040 in AEO2014, compared with 11.0 cents/kWh in the AEO2013 Reference case.