BMI View: High coal prices are creating upside potential to BMI's gas consumption forecasts, as recently released data show a surge in Japanese gas use for power at the expense of nuclear and coal. Japanese power companies stepped up the use of fossil fuels between April and June 2011 in an effort to counteract lost nuclear generation capacity in the wake of the Tohoku earthquake. The data, compiled by Reuters, are in line with BMI's core view that gas, and to a lesser extent liquid fuels, will play the major role in replacing nuclear power; which follows Japan's move away from atomic energy as a direct result of the Fukushima nuclear disaster caused by the earthquake. The use of gas could become still more signifcant over the short term as high coal prices prevent the solid fuel from taking up more of the slack.
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