As recently as July 2008, natural gas was priced at $13 for a thousand cubic feet so asking what if it cost $10 is not asking what if the impossible happened.
Here are 7 Big Changes that would happen if gas cost $10 for a thousand cubic feet:
1. Coal plants that are now retiring would not retire. Why? The wholesale price of electric generation would nearly double or be about $100 per megawatt-hour or 10 cents per kilowatt-hour. Owners of coal plants would keep them operating and make the investments required to do so, because the plants would earn at least twice the revenues they do now when gas is at $4.50;
2. Building new natural gas plants to make electricity or switching coal plants to natural gas would grind to a complete stop. Natural gas at $10 would make natural gas plants uncompetitive and uneconomic.
3. Natural gas at $10 would boost sharply the price of electricity, forcing more energy conservation through the pain of high prices.
4. Natural gas at $10 would make wind energy more economic than building a new natural gas plant. The cost of a wind farm is now in the range of about $55 to $70 per megawatt-hour and $10 gas means about $100 per megawatt-hour wholesale electricity generation prices.
5. Natural gas at $10 would cut the payback period for solar systems significantly as the price of grid electricity would be much higher.
6. Natural gas at $10 would mean a customer using natural gas to heat (90 mcf/year) would pay about $500 more per year in gas heating bills.
7. Natural gas at $10 would mean electricity bills that would increase by about 5 cents per kilowatt-hour or $500 per year for a customer using 10,000 kilowatt-hours per year.