Devon Energy Corp (DVN), Chevron Corporation (CVX), ConocoPhillips (COP): How Coal Is Keeping the U.S. Atop the Natural Gas Game

Today, it’s a different story. We have reduced natural gas imports by 200 billion cubic feet per month, and the prices have converted several power plants, coal’s largest customer, to use gas instead. Not only has this deflected all that gas back into the global market, but it has also sent U.S. coal overseas. In 2012, Peabody Energy Corporation (NYSE:BTU) saw a 13% reduction in U.S. coal generation use and exported 120 million tons of metallurgical and thermal coal. The combination of these moves has severely brought down the price of coal around the world and caused several shale gas candidates — Europe, China, and India — to increase their coal consumption.

With U.S. coal hitting foreign markets, it lowers energy generation costs, which also lowers the incentive to drill for shale gas. As long as energy prices remain modest for these countries, the rate of return for shale gas in these other countries will be low and will be less attractive for oil companies to produce there.

What a Fool believes
The regulatory framework and infrastructure in the U.S. has fostered shale gas like no other place in the world. It is so lucrative that many foreign oil companies have started to form joint ventures in the U.S. to learn how to drill for shale. Also, with America creeping back toward being energy self-sufficient, it is reducing the costs of fuels so exploration abroad isn’t as economically feasible. Certainly this will help U.S. coal exports, but it could also help create a favorable environment for U.S. LNG exports. So as long as we continue to produce energy cheaply in the U.S., we may remain on top of the shale gas game for quite some time.

The article How Coal Is Keeping the U.S. Atop the Natural Gas Game originally appeared on Fool.com.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool. The Motley Fool recommends Chevron Corporation (NYSE:CVX) and Enterprise Products Partners and owns shares of Devon Energy Corp (NYSE:DVN).

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.