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Lower Natural Gas Supply Gives Coal Hope

July 16, 2012

Despite the recent trend which suggests that natural gas production is on the rise and coal may never recover, the opposite may be the case. The root of this possible reversal lies in the huge difficulty of accurately measuring the natural gas reserve. There is massive uncertainty with regard to the natural gas supply; only about 10 percent of the total natural gas supply is proven, leaving the other 90 percent unproven. Only taking into account this sure portion of natural gas supply, the natural gas reserves are much lower than other claims. In January, President Obama claimed the U.S. has a 100 year supply of natural gas, but other estimates have that figure as low as ten 10 years.

If only a small fraction of the believed natural gas supply exists, natural gas prices will skyrocket as supply continues to decrease and eventually runs out. Coal prices would become more attractive despite strict government regulations imposed on it. In this scenario, coal would likely recover while natural gas would suffer greatly. If this is the case, coal may not be dead after all.