Changing the mix

The biggest change in OGJ's latest Midyear Forecast, p. 28, is the surge in the use of natural gas, especially as it cuts into the use of coal for electric power generation in the US. Last month the US Energy Information Administration released a report, Fuel Competition in Power Generation & Elasticities of Substitution, which analyzed the competition among coal, gas, and petroleum used for power generation. Substitution elasticity measures how the use of the fuels varies as their relative prices change. Many factors other than fuel prices determine which power plants are utilized to meet electricity demand, including environmental regulations, generators' nonfuel variable operating ...

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