Summary
While the natural gas industry has been on a winning streak in recent years, it has now run out of luck in Washington. The industry has trouble making its case to Congress. Lawmakers from coal-producing states appear committed to keeping coal as the nation's primary power producer. Influential lawmakers from both parties say that new technology to capture and bury coal emissions are a better bet than natural gas. A climate-change bill passed the House. Coal will try to defat gas in the Senate.
Analysis
Given the nature of politics in the U.S., both industries have to win something and both have to lose something. Otherwise no bill can become law. The best bet for the natural gas industry is to focus on conversion of vehicular traffic to natural gas as a primary fuel. Gas already has a head start in this category. There is room for research into the possibility of switching diesel locomotive engines to liquefied natural gas. This however can not be done quickly. As for electric power generation, the coal industry will lobby with great intensity to maintain its position and they will no doubt be successful. Today the crux of the issue is jobs. The coal miners need jobs. Oil field workers need jobs. As things stand right now, more oil field workers than miners have lost their jobs. Thus legislation will strive to aid both industries. Actually, the coal industry could try to influence lawmakers to encourage the use of coal as a transportation fuel. Many years ago in Japan, automobiles had engines powered by gas generated from the incomplete combustion of coal (and charcoal). But this is a long shot for the miners. The equipment is cumbersome and being located at the rear of the vehicle is subject to the consequences of a rear end collision. Better to stick with electric power generation where coal is the cheapest fuel around. No one should think that the competition between coal and natural gas will have a comprehensive conclusion anytime soon.
Michael Lynch consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
