The Coal Shortage of 2022
This is a continuation of the following article and the one inside it.
As Russia severely lowers the amount of gas it sells and sends to Europe, there is a mass convergence on the world's dirtiest and cheapest fuel. Coal. A forecast I made last year. First, let us see which countries are now going back on coal.
Austria Returns to Coal Era in Hedge Against Russian Power Play
Verbund told to resurrect Mellach coal plant for generation
Decision made after Russia restricts natural gas exports
Austria is returning to the coal age, reviving use of the dirtiest fossil fuel to generate power as Russia curbs flows of natural gas to Europe.
Austra was the second country in Europe to eliminate coal from its electricity grid. But Austria isn’t alone.
Germany Steps Up Measures to Conserve Gas as Russia Slows Supply to Europe
Berlin to restart coal-fired plants and auction gas to reduce consumption
Germany was the number 1 country in pushing the Green insanity Europe-wide.
Austria, Germany, Italy and the Netherlands announced plans this week to prepare to resurrect old coal plants as gas supplies dwindled. Before any further comment, a couple of quotes.
And here we have another tipping point (a suspicious one at that), diverting gas from China to Europe, coal not going to China, here comes a other power crunch, which feeds into the system, it will have secondary and tertiary order effects, and fuel the supply chaos.
Power is getting expensive everywhere, it will get either more or stay expensive throughout 2022, therefore it feeds into the contagion and it's effects.
At this point it looks less like cascade effects and more like co-extinction cascades. We are barely into the first week of the year and the tone is set and partially the course.
Economy will hold until it doesn't anymore.
Nothing survives EROI. Biological or otherwise. This all feeds into the Nova Swan.
The following quote comes from another article talking about the costs of a war in Ukraine.
Under potential blackouts, energy shortage and the possibility of affecting economic recovery, countries will only accept pressure so much, before saying damn it all. China has showed this multiple times, consuming more coal than the rest, and projections see even higher consumption in the next 10 years. The more elites push for ESG and green future, the more dirty energy grows. It’s inevitable.
Many things have changed, but non-linear dynamics stayed the same, market dynamics stayed the same, and human behavior never changes. Per my analysis in the first paragraph (bold text especially) the events in the first 4 weeks of the year set the tone for the rest of the year, causing a cascade of events, which I forecasted, and kept tracking down and updating the data and forecasts, yet the initial analysis holds true, stays the same.
The diesel/gasoline and distillates situation stays the same, so much that the EIA (US Energy Information Administration) postponed its release of very sought-after information “for system error reasons”. All experts, OPEC, and refineries agree with the same outcome. There won’t be enough fuel to tackle prices as much as before 2023 ends IF there are investments in the field.
Even the biggest exports of LNG in the world can’t accommodate the demand, the US doesn’t have the fleet, and its main port of export suffered an accident (Freeport), so as expected everyone will converge on the cheapest and dirtiest option. Coal.
Said fuel already reached Record All-Time High prices yesterday in Europe, and there is no end in sight to the increase in coal prices, and I will demonstrate why.
Australia, a major supplier of coal and natural gas to the rest of the world, is itself facing a power crisis as malfunctions and fuel supply problems dog aging coal-fired plants that have taken a back seat to investment in renewable energy.
An Indonesia-based producer pointed out that there is a significant gap in the quality of coal that is expected by European buyers and the grades that are produced in the country. “Indonesian suppliers who have specs that close to the European requirement might already have commitments to Northeast Asian buyers, which are their traditional customers.”
Another Indonesian miner said that they are currently focusing on normalizing production and will pursue new markets after the monsoons “subside hopefully in July”. “We have received inquiries from European nations but our ability to service them is limited by availability for the present due to bad weather affecting output,” the person said, adding that the priority for them is to meet domestic supply obligations and service backlogs against their existing contracts
Power cost hike, supply crunch ahead as last Hawaii coal plant closes
Seoul plans to suspend voluntary coal plant restrictions during July-August this year in a bid to reduce LNG use during the peak demand period, a source familiar with the matter told Argus.
These are but a few of the data points for the reader to take into consideration, even if countries allied with Russia are buying Gas at a steep discount, the market dynamics themselves didn’t change, and the shortages persevere and get more intense.
If you followed the linked articles, or the energy sector a little closer than the average person, you are aware that almost all grids, grids everywhere, from the US, to China, from Ecuador to South Africa are suffering, and some are collapsing. After Sri Lanka collapsed, now Laos follows the same path based on fuel shortages verging into an economic collapse.
Contagion will happen (when a set of failures creates new failures elsewhere), and every country will go after coal, even more than now. The only upside is that maritime shipping is cooling down, demand is lowering, and freight prices are also going to “quasi-normal” levels, so one of the previous dynamics I mentioned months ago changed, where there was no freight capacity to move coal around.
Of course said capacity changes when it is international (truck) freight, where in some countries, to this day, the demand for internal use of coal is so high, there is no sparing capacity.
Of course, lest we forget one of the world’s biggest consumers of coal.
Chinese premier calls for more coal production as electricity demand soars
Records for electricity usage broken in Shandong, Henan and Jiangsu after early summer heatwaves
China’s premier has called for increased production of coal to stave off mass blackouts, as early summer heatwaves have prompted record electricity usage.
On Friday, authorities again issued high temperature warnings for about a dozen provinces across the central and northern provinces, after consecutive days in the high 30s.
As people sought to escape the heat this week, state media reported, citing the State Grid Corp of China, that electricity demand was up 8.8% in north-west China compared with last year, and by 3.2% in northern China. Records for maximum electricity loads were broken in Shandong, Henan and Jiangsu.
If you are an old reader you will remember I kept a pretty close eye on the Chinese energy woes Q3/Q4 last year, by the simple fact that those rolling blackouts and energy rationing in one of the world’s biggest industry powerhouses would severely impact everything else, from fuel prices to good prices.
Dynamics somewhat changed, yet the outcomes of the energy woes didn’t, China is the world's largest producer, consumer AND importer of coal in the world, as it has been with grains, and the government has slowly attempted, and failed to control prices, and now they threw a little of their Green goals out of the window because stability and energy security are more important to the party than anything else.
There are different qualities of coal, and different applications, and China now doesn’t care. From quality to quantity, as long as it keeps energy supply stable, and prices somewhat within reason.
The major problem for a coal spike in price, and a supply shock never seen before isn’t merely an impact on the energy sector. Coal is widely used in industry too.
Surging Energy Prices Force Japanese Steel Giant to Revisit Coal
Nippon Steel studies mine investments after spike in prices
Firm also wants to fix how prices are reflected in the market
Non-power sectors might be severely impacted by rising coal prices, which will persist. 1 year after the woes, some sectors can’t recover, and small business owners are going down. Other industries will also go looking for coal and won’t be able to afford/outbid bigger competitors.
While there are trade-offs outside the control of man (China had an easing on its coal shortages because its massive rains these past few months, at the cost of losing a lot of crops…), the trend is the same as we get into a hard Summer in the Northern hemisphere, which isn’t the actual concern. Most countries concerns are the same in the Great North.
The winter, how severe it will be, how much stock of the necessary fuels they will have to tackle the season, and how much industry might be affected.
The intent of this piece is not merely following the work so far, or new data points but a reminder that a lot of countries will experience rolling blackouts, and if you are able to, you should prepare.
Right now, very few places are experiencing blackouts at scale, it has been localized for the last 4 weeks, so much so that you need to dig hard on social media to find traces of it. But if (In my opinion, more like when) blackouts and some minor level of grid failure hits, things you need will go from very scarce to none at all fast, and prices will skyrocket at the point only the very wealthy can afford.
Losing power for a few days can be either an inconvenience or outright cost you money. There are still generators available, solar panels, and external batteries. There are good, affordable Chinese products out there too.
Of course, this can also be an investment strategy, because the coal, solar panel, and everything in-between market will be squeezed by high demand…
I wish you all a nice weekend and a good night.
Deep appreciation for all the supporters!
A virus post is coming tomorrow, I am working in 3 of them, but undecided where to go with each, because they are fairly complex, and simplifying some of the science is quite hard sometimes.
the problems for the globalists mount, how can they bring in digital currency and ID's if the grid is unreliable?