MARKET WATCH

EPA ruling may be a ‘big plus’ for natural gas

Published: June 29, 2015 6:14 p.m. ET / By Myra P. Saefong

 

The U.S. Supreme Court ruling against the Environmental Protection Agency’s regulations on
power-plant emissions is a “big plus” for natural gas, an analyst said Monday.


The Supreme Court ruled that the EPA needs to consider costs when regulating pollution caused
by power plants, which include coal-fired plants. The court ruling keeps the EPA from imposing
new regulations to reduce the amount of mercury and other air toxins.


“The ruling also will be a negative for solar and wind which may be a positive for natural gas ....
Those proposed solar and wind facilities may now be natural gas,” said Richard Gechter, Jr.,
principal and president of Richard W. Gechter Natural Gas Consulting.


Prices for natural-gas futures climbed Monday, with the August contract NGQ15, -0.86% up 3.5
cents, or 1.3%, to settle at $2.805 per million British thermal units.


“Some utilities are still going ahead with their alternative-energy plans,” Gechter said The
original EPA rules aimed at reducing pollution were “mandatory” and now power plants “have
some flexibility,” he said.


Gechter notes that “natural-gas plants can be brought online in 30 minutes — rain or sun.”


“I do not expect the utilities to completely exit these [wind and solar] projects, but they will not
be a priority,” he added, also noting the higher costs of those alternative-energy sources
compared with coal or natural gas.


The Supreme Court ruling also provided a boost to coal stocks Monday, including Peabody
Energy BTU, -11.35% Arch Coal ACI, -3.74% and Alpha Natural Resources ANR, -8.45%
which moved higher in Monday trade after the ruling.


FUTURES AND OPTIONS TRADING INVOLVE SIGNIFICANT RISK OF LOSS AND
MAY NOT BE SUITABLE FOR EVERYONE. OPTIONS, CASH AND FUTURES
MARKETS ARE SEPARATE AND DISTINCT AND DO NOT NECESSARILY
RESPOND IN THE SAME WAY TO SIMILAR MARKETS STIMULUS. A MOVEMENT
IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE
RELATED FUTURES & OPTIONS CONTRACT BEING OFFERED. SEASONAL
DEMAND AND CURRENT NEWS IN COMMODITIES ARE ALREADY REFLECTED
IN THE PRICE OF THE UNDERLYING FUTURES.