Look back to Nymex gas forward prices to see why the electricity generation market share of coal fell precipitously from 48% in 2008 to 39% in November and December of 2011.
Pre-shale and post-shale boom Nymex prices paint two starkly different energy worlds for producers and consumers of natural gas, including owners of power plants. The difference is as stark as that between night and day.
Prior to the shale gas boom and as recently as May 28, 2008, the Nymex forward prices had gas trading at about $11.30 for a thousand cubic feet in 2009, $10.50 in 2010, $10.60 in 2011, $10.75 in 2012, and $11 in 2012. The 2008 pre-shale gas boom was a world of expensive natural gas indefinitely.
By May 12, 2011, well into the shale boom, with probably more than 20% of all gas supply coming from shale production, the nymex forward prices were about $4.30 for 2011; $5 for 2012; $5.20 for 2013; and $5.50 for 2014. Nymex prices were cut by $6 to $5 per thousand cubic feet and inexpensive natural gas was a reality.
For owners of power plants, the sharply lower forward prices of gas have changed minds about using gas and have been hard to resist.