Trump Seen Shaving 11 Percent Off U.S. Gas Demand for Power

(Bloomberg) -- The volume of natural gas burned by America’s power plants stands to fall by 11 percent should Donald Trump become the next president, according to Bloomberg Intelligence estimates.

Coal would fare better under a Trump administration at the expense of gas, the primary fuel for U.S. power generation, if the Republican follows through on a pledge to roll back environmental regulations, Bloomberg Intelligence analysts Rob Barnett and Kit Konolige wrote in research published Thursday. Trump repeated a pledge to eliminate clean air rules proposed by President Barack Obama in a speech to gas producers in Pittsburgh Thursday.

Gas for power generation in 2030 would be 11 percent below 2015 levels if Trump is elected and eases regulations that penalize coal, the analysts wrote. Under Hillary Clinton, a Democrat who has pledged to enforce Obama’s Clean Power Plan, gas demand may rise by 5.8 percent, they said.

“If you give up on the Clean Power Plan, good luck on pushing more gas into the power sector,” Barnett said by phone Thursday. “There’s a healthy amount of policy-driven demand that’s at stake.”

The Obama plan, which aims to wean the U.S. off coal in a bid to reduce emissions blamed for global warming, targets a 32 percent cut in carbon dioxide from U.S. power plants from 2005 levels by 2030. It has been opposed by more than half the states and is the subject of a legal challenge with arguments set for Sept. 27 in the U.S. Court of Appeals for the District of Columbia.

Gas used by power plants has risen 55 percent since 2006 as a boom in production from U.S. shale fields drove down prices, the analysts wrote. It produces less carbon dioxide than coal when burned. U.S. gas futures have fallen 35 percent in the past decade, settling at $2.99 per million British thermal units on Thursday.

“The use of natural gas has gone through the roof and in power plants in particular,” Ryan Kelley, who helps manage the $1.5 billion Hennessy Gas Utility Fund, said Thursday in an interview. “When it comes down to it, this trend has been happening for a while. It’s probably going to continue.”

Tyrone Gayle, a spokesman for the Clinton campaign, declined to comment. Representatives of the Trump campaign didn’t immediately return e-mails seeking comment.

Mining Moratorium

Trump could also roll back Obama’s proposed moratorium on coal mine leasing on federal lands, Barnett said. The moratorium lays the groundwork for an eventual halt to about 400 million tons a year of production, or 40 percent of the U.S. coal supply, a boon for gas producers, Barnett said.

“I’m going to lift the restrictions on American energy and allow this wealth to pour into our communities including right here in the state of Pennsylvania,” Trump said to applause, while reading from a teleprompter to a crowd about 1,500 conference attendees in Pittsburgh on Thursday. “We will end the war on coal and on miners.”

Either candidate also could influence the gas market by speeding or slowing exports of the fuel. The Federal Energy Regulatory Commission and the Energy Department control permitting for gas export terminals.

--With assistance from Kevin Cirilli Jennifer A. Dlouhy and Margaret Talev To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net. To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Susan Warren