This morning I posted a blog talking about how a second round of new nuclear power plants analogous to the one that the US undertook during the period from 1970-1990 might lead to a lengthy period where natural gas supplies will be greater than natural gas demand. I described how such a situation can lead to lower prices and pointed to the behavior of prices during the period from 1985-2000 as an example.

A commenter challenged my analysis and stated that association is not causation. I agree with that principle in general, but it can be educational to look at the price graphs and the electricity production graphs at the same time. I will freely admit to the American bias of these graphs, but since natural gas was largely a domestic industry with little international trade during the period discussed, I think that the point is reasonably valid.


The above graph shows the contributions to the US electric power supply from natural gas and nuclear power, ignoring all of the other sources. As nuclear power grew from zero in 1956 to nearly 800 billion kilowatt hours in 2006, natural gas went through a 15 year long period of declining production until it started increasing again in about 1991. In 1994, the contribution of natural gas to electrical power production in raw numbers was within 5% of its contribution in 1970, 24 years earlier.

The below graph shows the price of natural gas over time. Please draw your own conclusions, but I think it is pretty obvious that nuclear power had a measurable impact on the use of natural gas in electrical power generation. That impact also affected the long term price behavior for the fuel. By affecting both sales volume and price, nuclear power played a significant role in the profitability of the natural gas suppliers over a long period of time.



About a year and a half ago, I published a similar graph showing how nuclear power took market share from oil in the power generation market. To save you a searching effort, I will repeat that graph again here.


Since oil and gas suppliers generally share the same corporate headquarters, the introduction of nuclear energy into the US electrical power market had a double impact on the profitability of some of the largest and most powerful companies in the world. Though I can be naive about many things, I am pretty sure that nuclear power's capture of sales volume from oil and gas fueled generators did not win the technology any friends among those people who like selling oil and natural gas or among those who like collecting taxes and political contributions from those who sell oil and natural gas.