Natural gas is not cheaper than coal (in the long term)

Via Green Sheet, Robert F. Kennedy is the latest to call for replacing coal with natural gas in the U.S. power generation mix, because gas is "cheaper and cleaner." Cleaner, yes, but as I've mentioned before, natural gas is only temporarily cheap. There is a supply glut now, but nothing the market can't sort out given a few years, and, as Econbrowser shows, in the long run natural gas and oil tend to converge to similar prices on an intrinsic energy basis. So unless you believe oil is destined to be cheap forever, gas will not be either. It may take 1 year, or 2, or 5, but you can count on gas prices coming back, at which point the economic advantage of coal (any government-imposed price of carbon notwithstanding).

I find it kind of irritating when big names with (apparently) zero understanding of commodity economics sound off on important issues like this - it certainly doesn't help the public debate.

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