For most of 2012, natural gas gained market share against coal for U.S. power generation. However, in recent months natural gas has given some gains back, due mostly to higher nat gas prices relative to coal prices.
Despite this, many view coal-to-gas switching as a long-term lasting trend.
Coal-to-gas switching is a term used for when power plants decide to use natural gas in place of coal as fuel. Given sustained low natural gas prices, and the fact that natural gas burns more cleanly than coal, coal-to-gas switching had been rising for most of 2012. This trend increases natural gas demand and provides some support to natural gas prices, therefore, helping upstream energy producers with significant natural gas production. Power producers are incentivized to use more natural gas and less coal when natural gas prices fall relative to coal prices.