As Investors Bet On Rising Natural Gas, ETF In Flux | Page 2 of 2 | ETF Trends

Supplies are abundant right now, and low prices could cause a shift within the electrical power industry. The onset of lower natural gas prices is  bad for the coal industry, in that it has long been a source of fuel for the electric-power industry, reports Rebecca Smith and Ben Casselman for The Wall Street Journal.

The demand for electrical power is lower at this time, which could cause power companies to invest billions in natural gas companies, rather than coal. This would cause a shift within the industry that is over 100 years old, as coal is one of he biggest producers of electrical power.

The trend also developed in the 1990’s, with the power industry interested in natural gas, as states deregulated their electricity markets, a new breed of so-called merchant generators built scores of gas-fired plants, encouraged by rosy supply forecasts and easy borrowing.

New natural gas discoveries have been found in Texas, Louisiana, and Pennsylvania which also supports the case for natural gas as a strong power source.

  • United States Natural Gas (UNG): down 32.2% year-to-date

  • Market Vectors Coal ETF (KOL): up 64.4% year-to-date

  • PowerShares Global Coal (PKOL): up 74.5% year-to-date

  • iPath Dow Jones AIG Natural Gas ETN (GAZ): down 34.9% year-to-date

For more stories on natural gas, visit our natural gas category.