Natural gas tops coal as top source of electricity in US
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Call it a one-two punch against coal. As global demand for U.S. coal exports continues to sag, domestic demand at power plants has been sliding as well. For the first time ever, natural gas trumped coal as the top source of electric power generation in the U.S. In April, roughly 31 percent of electric power generation came from natural gas, whereas coal accounted for 30 percent, according to a recent SNL Energy report. It's a dramatic difference from April 2010, when coal accounted for 44 percent of the mix and natural gas just 22 percent. "There's been a change both from a regulatory and economic perspective in terms of the competitiveness of natural gas," said Steve Piper, associate director of energy fundamentals at SNL Energy. "The transition from coal has been stunning." Read More What shuttering coal plants means for energy jobs

Stunning is right. Coal prices have continued to crater this year, extending a years-long downward trend.

American Electric Power's coal-fired John E. Amos Power Plant in Winfield, West Virginia. Luke Sharrett | Bloomberg | Getty Images

This has been particularly true of coal mined in the eastern U.S. Since the start of the year, Central Appalachian coal (CAPP) futures have plunged nearly 15 percent to roughly $41 per ton; since their 2011 peak, prices have nearly halved. Tepid global economic growth, a stronger dollar, cheap natural gas and expanding U.S. regulations have pressured prices. Coal breaks down into two categories: thermal coal, used to generate electricity at power plants, mostly in the United States; and export coal—for example, metallurgical coal used by China and developing economies to make steel. On Monday Chinese customs data showed coal imports in China plunged 33.7 percent in June versus a year earlier, thanks largely to sluggish demand. China is the largest consumer of the commodity in the world. U.S. coal exports have been in free fall for years as countries like Australia and Indonesia have provided supply to China more inexpensively. The stronger dollar is also making American supply pricier abroad. Read More

But perhaps the more worrying trend is at home. Natural gas futures continue to trade below $3 per mmbtu, as the onshore drilling boom has increased production by 30 percent since 2008. That coupled with a growing list of federal regulations restricting the emission of greenhouse gasses and utilities have had plenty of motivation to switch to natural gas. SNL Energy's Piper points out that many utilities are simply abandoning coal. In last 18 months, 17 gigawatt hours of coal-fired capacity has been retired completely, much of it already replaced by gas generation. "It could be the beginning of the end for the current fleet of coal plants," said Piper. However he also noted that it's likely the start of a new chapter in which the coal industry takes a much more serious look at options to burn the fossil fuel more efficiently to reduce emissions.

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