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One of the live oaks that bless my home

Friday, May 6, 2011

Global coal production revisited - again

On Friday, 06 May, 2011, Professor David Summers posted on OilPrice.com an oddly emotional article,  A Look at the Serious Energy Shortages in India and Pakistan.

Dr. Summers correctly points out that severe shortages of coal supply in India and Pakistan will not be quenched by imports from Australia, because China will outcompete anyone for the same coal imports.

From our analysis it follows that China's coal production will be difficult or impossible to maintain at the current high level. And China's coal demand is skyrocketing despite attempts to reign in coal burning by their most inefficient industrial enterprises.

Dr. Summers then goes on to say that the folks like Tad Patzek and Dave Rutledge have it wrong anyway, when they talk about the global peak of coal production and inability to satisfy demand that follows.  

Well, here we are: Too much demand worldwide, and not enough supply. The coal price goes up, way up, and still not enough supply.  How does one call this phenomenon?  Inattention, according to Dr. Summers.  The global peak of coal production, according to Patzek and Croft.

The multi-Hubbert cycle analysis is the best available estimator of future performance of the past and current coal mines around the globe, and their minor extensions.  The verdict is in: The year 2011 is the year of global peak of coal production.

The new coal mines haven't materialized for a variety of reasons, environmental, technical, logistic and economical. In the meantime, many of the current mines continue to decline.  Such is the ice-cold logic of summation of uncorrelated random variables.

P.S. On 5/25/2011, the New York Times reported on electricity production cutbacks in China.  Dr. Croft commented as follows:
Steam coal from Newcastle, Australia, was US$120.66 per metric ton ($109.46 per short ton) last week. South African prices are just as high in spite of longer haul distance to Asia. Compare that to $78.85 per short ton for Central Appalachian coal and you can see the beginnings of an Asian coal crisis. If you search 'China electricity shortage' on Google news, you see a lot of evidence that we were right about 2011. Shaanxi, Shanxi and Hubei are among the provinces with electricity shortages and they are three of the most important coal-producing provinces. I predict that China will suck up world coal exports, India will be caught short in a big way and the coal resources of Indonesia will be plundered as rapidly as possible with scant regard for the environment or local populations. As they say in the UK tabloid press, remember where you saw it first!
P.S.P.S. 6/2/2011.  I am back in Poland for a short visit.  The first news I see in a newspaper is this:  A Polish coal concern has been valued at 24 billion PLN ($9 billion) at the initial stock offering.  This concern is the largest exporter of coking coal in the world.  The price of coking coal went up 40% this year, to the current $320 per metric ton.


  1. Data from the EIA regarding world coal consumption in QBtu indicate that the peak was actually in 2009 at 133.21 QBtu. This was at the end of a three year plateau in which consumption varied little. Consumption dropped to 130.26 QBtu in 2010 after the 2009 peak.

    In 1991 and 1998 world coal consumption declines were followed by increases, so it is possible that new consumption records can be set, but unless Australian production recovers rapidly, it is hard to see 2011 consumption exceeding that of 2009. For the sake of our planet, we can only hope that consumption continues to decline at an ever more rapid rate.

  2. Love your blog!

    Any comment on the latest stats from BP? Coal use up by 7.6%. Although prices are high, production rolls on.

    Keep up the great work!

  3. While for some an ideal world would see no reliance on thermal coal (steam coal) to produce electricity, coal statistics would suggest the commodity isn't going anywhere. Coal reports show if we have to live with it, we may as well reduce the impact of coal and CCS seems to be the best solution found to date.
    Cherry of www.coalportal.com