The Coal Crunch is Materializing

In recent days a series of media articles surfaced pointing to a concerning situation in China. The New Scientist reported:

At the end of a cold and stormy winter, the country has just 12 days of coal reserves at most power stations. Some provinces, including Hebei, bordering Beijing, have less than a week's coal left. This is a record low, the state electricity regulatory commission revealed on Tuesday.

It continues:

China relies on burning coal for 70% of its electricity. Even though Chinese coal production in the first quarter of this year was up almost 15% on the same period last year, it has apparently not been enough to meet rapidly growing demand.


The coal mining industry, and the rail network needed to bring the coal to the power plants, are both struggling to keep up with the drive to build ever more generating capacity. The strains raise questions about how much longer China's breakneck industrialisation can continue.

China Stakes presents even grimmer details:

The Vice-President of the State Electric Power Supervisory Commission, Wang Yeping, said that in Hebei, Anhui, and Chongqing, the stockpile of coal for power generation was not even enough to last 7 days. This situation is quite similar to the one that existed in January 2008. Theoretically, a stockpile that is smaller than 7 days supply has reached an “urgent level”.

This scenario is even more concerning coming during the Spring when electricity demand is at the lowest. Air conditioning is not needed yet and most of the country should by now be through with home heating. The coming Summer can indeed have some hardships reserved for China.

While the hard winter brought all sort of disruptions to the regular life of Chinese folk during the weeks prior to the New Year festivities, production kept strong during the first months of 2008, setting new records. These facts show that the difficulties felt during January and early February were mainly caused by shipping disruptions.

While cold weather continued for the rest of the Northern Hemisphere, China was granted some relief in March with some warm temperatures:

Temperature anomalies in March of 2008. Source University of Alabama in Huntsville.

Although out of season frosts returned to China in April, the southern provinces of the country are now well into Spring. So why these dwindling stocks now? China Daily have it by the numbers:

The General Administration of Customs said on Thursday that China exported 8.75 million tonnes of coal for $630 million [during January and February], up 13.5 percent and 39.7 percent, respectively, year-on-year.

Prices averaged $72.2 per tonne. For February only, exports were 3 million tonnes, down 32.1 percent.

Imports were 7.06 million tonnes, down 18.2 percent year-on-year. These shipments were valued at $450 million, up 13.1 percent. The average price was $63.3 per tonne. For February only, imports were 2.82 million tonnes, down 28.2 percent.

Putting it simply, China is importing a smaller volume of Coal than last year, but actually spending more money doing it. Especial attention should be taken to the prices per tonne, in the order of $60 – 70.

At the same time prices in Europe are well above $100 /tonne and Indonesian Coal is expected to reach a $150 /tonne, this kind of Coal was below $50 /tonne last year.

Apparently the international Coal market is getting tight enough for a country like China to feel the pinch. While Europe and North America are still able to import their usual share with prices triple of those last year, China isn't. Volumes available for export in South East Asia, Australia and New Zealand are being diverted away from local buyers with lower purchasing power.

Partially this problem is rooted on extreme weather events that have been affecting Australia's production. Floods during the first months of the year brought hard cooking coal prices to a spike of $400 /tonne [hat tip Big Gav]. Still, the same article indicates long term contracts being celebrated at $300 /tonne, and thermal coal also bound to go over $100 /tonne this year.

With the Coal Crunch the world is stepping into is just another dimension of the present energy crisis that is being triggered by anaemic oil production. Either by pushing demand up for other energy sources or supply down for minerals, food and other commodities, oil is building an economic whirlwind that has the potential to transform the face of our societies. Ready to ride?

Previously at Coal Crunch?

Luís de Sousa

With 100 days till the games start, I was expecting China to start stockpiling coal and diesel to meet expected demands. I had thought they would especially effect the price of diesel. Is there some expectation as to how much more than normal they might need?

One more nail in the coffin that leads us to think about Climate change as something that is going on, and is affecting us. Though I know some people will start a debate about why climate change is happening or even if it is happening, let us just think about it this way. Whatever is happening is not the Normal things of yesteryear, and things are all coming together into a fine pickle.

We have Stock piles of Coal in China going south right when they are needing a bigger supply of Coal, The Weather seems to be doing them a disfavor, and they are still trying to grow.

If they were to hit a bottle neck and fail to grow, what would it all mean for the Demand of Oil? Would their Oil demand go up or go down? That seems to be a question we need to have an answer to, if not at least some thinking done about.

If their economy were to crash might the world demand for oil also nose dive and the price Hide the fact that we are at or will soon be at Peak-Oil-Production?

I agree with your position on global warming, and just wanted to add that since the internal combustion engine is mandmade and spews CO2, a proven greenhouse gas, then humankind is responsible for global warming. One only need look at the extremes; e.g. with no CO2 in the atmosphere the Earth would freeze into an ice ball. With too much CO2 our planet would experience the same outcome that Mars did, which is loss of all of its surface water. So as the ppm (parts per million) increase incrementally from year to year, then the planet will continue to warm.

The idea of sequestering CO2 seems like a good idea, yet the coal plant the White House was touting as a new 'clean coal' plant was nixed due to overage costs. If the US cannot make one single coal plant that sequestors CO2, then how can anyone expect China to sequestor CO2 from all of their coal plants?

Fact is as China continues to bring a higher living standard to hundreds of millions of its poorest people, the price of energy production from burning coal must be kept to a minimum so it remains affordable.

As such we can figure China will continue to burn coal without sequestration at an ever greater pace.

The consequences of unabated increases in CO2 emmissions has already hit one tipping point in the artic, with the unprecedented melt in 07. The black ocean waters of the Artic absorb 90% of the energy from the Sun, whereas ice reflects 95%. As more energy is absorbed, the Artic ocean floor is only 1.3 degrees fahrenheit from releasing its methane deposits. When that starts to occur we will have passed a 2nd tipping point. The 3rd will be the release of methane from peat bogs in Siberia. The 4th tipping point will be the partial collapse of Greenland and West Antarctica, and the 5th will be the release of methane from the continental shelves.

Keep in mind that there is a dynamic known as thermal inertia. The oceans hold a thousand times as much thermal energy as the atmosphere, and the energy absorbed the oceans has about a 30-40 year delay to when it impacts our weather. So we haven't even experienced yet what is already in store from past emmissions, let alone having any idea what today's emmissions will portend in 30-40 years from now.

Couple this with the real possibility that as more and more fresh water enters the oceans at the poles, the thermohaline conveyer will slow and then at some threshold completely shut down. That will be our next ice age. But how is humankind going to handle an ice age with 6.5 billion people spread all over the world? They will have to migrate closer to the equator which is Equador through Brazil in South America, the Sahara Desert of northern Africa, and southeast Asia, a daunting vision.

Fact is humankind is facing peak oil and global warming, while their population and energy demands continue to expand. What we need is a magic bullet, an energy supply that won't exacerbate global warming and one that will allow for cheap energy. Any ideas?


are you predicting that the shutdown of the conveyer would overcome any Global Warming effect up to that point? Whats the timeframe?

Ultimatley the only solution is to tap into Energy Products derived from nuclear forces. We have tapped them directly in recent years (nuclear Electrical Energy from fission decay) but most of the tapping has been done from its by products -fossil fuels that have captured the Suns output over millenia and are thus very concentrated- or weaker Sun Energy side effects like wind, wave, solar heating and photon capture (PV). The available direct potential is immense but thin and so the concentrated forms are preffered (time having done the concentrating work effort for us).

The main thrust of the doomer argument wrt. replacements is -using a drug analogy- that we have become so addicted to the hit of crack cocaine its going to be almost impossible to switch to 50 cups of coffee a day by way of a replacement. And so we are looking at a period of 'cold turkey' that most people just don't want to face up to: however Mother Nature has the padded cell prepared and is pushing us towards it.

There are a couple of promising ideas on the table to take us to the 'next level' -my personal faves at the moment are:

IEF -Inertial Electrostatic Fusion (almost laughably simple fantasy tech that if it works could be rolled out pretty quickly at low cost and will change everything)
Thin Films PV -every home should have one, a crash program of manufacturing plants: 250 countries with 100-1000 plants each perhaps would do it.
OTEC -why not use the thermal capacity of the sea 24/7/365? Major investment though.

-I expect nuclear will spring like mushrooms. Note all the solutions don't really prevent the liquid fuel crisis though. We might be able to use LNG, CNG or ramp up CTL/non-food bio as we switch but it will be tight. Overall I expect demand destruction and conservation to be the main winners 'Post Peak'.


What we need is a magic bullet, an energy supply that won't exacerbate global warming

"We" seem to have invented the bullet already -- multiple copies and permutations of it. It's made of lead and depleted uranium and plutonium and U-235 and various nitrogen compounds, plus the growing political will to deploy it. It won't so much increase the energy supply as make it less necessary.

Of course, if human efforts fail, Mother Nature can help. There is always pestilence and starvation to fall back on.

My impression was that you're approaching the thermohaline inversion backward. It's not that it would plunge us into a new ice age, it's that it *might* plunge *northern Europe* into a new ice age. Warm water from the mid-atlantic flows north past the US continental shelf, turns east when it hits southward-running cold currents coming off Greenland's east coast, and then procedes to do a loop around England, Scandinavia, and the Arctic Ocean. Vacation spots in France, Italy, and Spain are at the same latitude (and therefore get the same amount of solar flux coming into their atmosphere) as snowy Vermont. London lines up with polar bear country in Hudson Bay. Denmark is at the same latitude as parts of Alaska. The main thing keeping these areas relatively warm are surface ocean currents, and the air blowing east off of them. It's one of the major reasons that the term has become "global climate change" instead of "global warming."

At the moment, I think the consensus is optimistic about all this, because it has recently been pointed out that previous simulations which showed the currents shutting down entirely did not take into account prevailing wind patterns.

It's a cautionary note that mirrors one of Schneier's Laws - Any person can design a climate simulation or theory that they are unable to detect flaws in.

I have seen people predicting that a shutdown of the Gulf Stream would give us a climate like Newfoundland or Siberia. They seem to asume it would be like Newfoundland and Siberia in the pre greenhouse world. In fact isn't Siberia hotting up quite a bit? Hence the melting bogs. Perhaps while the rest of the world heats up a shutdown would leave Northern Europe with a climate similar to the pre greenhouse norm.

Most of the world isn't showing damning, significant proof of GW one way or the other, in terms of average temperatures. The Arctic Circle, on the other hand... has exceeded all reasonably detailed models for the last few years, killing polarbears, melting permafrost, and opening up the Northwest Passage for the first time in historical memory. Things are not just at record highs, they're at landscape-changing highs - the Magnetic North Pole reaching *room temperature* in a summer heat wave. If the frightening regional temperature trendlines continue, we won't have a summertime Arctic ice pack to speak of in a decade, and Greenland's glaciers will be affecting water levels much, much sooner than people expected. Here's to hoping it's some freak abberation.

The fact that we don't really have any idea WTF is going to happen, but that a CO2 canopy's directly measurable effects are pretty clearly going to do *something* heat-related, is as scary to scientists as it is comforting to pro-corporate interests. Can raw, justifiable FUD ever coalesce into action when pitted against moneyed interests? We shall see.

I am a new contributor to this site, but have been an avid reader of the posts here for about a year.

I wanted to respond to Cslater8's question regarding any silver bullet ideas with a question of my own: What do people on this site think of the genomics angle?

For those not familiar with this, the genetics research pioneer, J. Craig Venter, and some MIT scientists are apparently working on coming up with a synthetic fuel source from artificial DNA. This is a kind of synbio process that makes use of so-called biorefineries and involves the use of large amounts of bacteria, as opposed to drilling through the earth's core at the bottom of an ocean.

From what I have read, such a fuel could also be designed in such a way that it would also capture its own carbon emissions. Talk about a silver bullet!

Is anyone familiar with the effort to create such a fuel and, if so, what are the chances of it happening in a timeframe that will enable us to avoid all Kunsterian emergencies, long or otherwise?

Hi, Risksorter.

Like other technologies that are coming onto the scene now, this one will likely bump into the limits of the system as it is now.

The bacteria presumably require nutrients and to replace the amount of liquid fuel we are using they would require a lot of nutrients. Currently, however, we are eating those nutrients ourselves and may not want to share them with the bacteria.

Each direction we turn there is a limit. Such is how it is just before collapse. All the buffers have been used up.



Thanks for tackling my question.

But what if those nutrients you describe come from something we are not already eating -- like seaweed or algae. Something that has not or cannot be over-farmed -- at least until we've had a chance to tap into the energy conversion cycle at a deeper, more fundamental level.

As energy is all around us, it is essentially a question of finer as opposed to grosser access. There may be ways of buying time, while pushing the process in the right direction. Given science, we cannot rule out the possibility of progressing towards a solution, as opposed to regressing to more primitive living conditions.

I am neither a cornocopian nor a believer in technology as a substitute for fuel, but we can never rule out the possibility of the kind of fortuitous breakthrough that the discovery of oil, itself, represented.

If we can come up with the R&D $, we can at least take a stab a this. Another six months of high fuel and food prices, and a lot of people -- even some influential ones -- will begin to wake up.

....the thermohaline conveyor will slow and then at some threshold completely shut down. That will be our next ice age.

No. The global warming will overwhelm any local cooling e.g. in Europe. There cannot be another global ice age unless the human species goes extinct (James Hansen). Read from the Potsdam Institute of Climate Impact Research what may happen:

General publication list:


Sea level rises 0.5 m - 1.4 m by 2100 (without ice sheet disintegration)

There is also a study which shows that while the Northern hemisphere cools (relative to the THC not shutting down), the Southern Hemisphere warms up, e.g. in the Pacific.

Good article, and/but the numbers are strange. I have four questions:

If memory serves right, there were articles and even posts at TOD in the past several months about the revulsion in the international coal market and China becoming a net coal importer - them importing more (along with exporting less) adding to the coal crises. From the numbers above it seems to me that's not the case, as the opposite happened: exports are up and imports are down. This shows a net import decline (or net export rise). What has changed?

With extensive knowledge about the severe winter conditions and the Guangdong electricity situation in the back of our minds: Why is China exporting more and importing less in such a critical period? Beijing 2008 coming makes it all the less easy to comprehend. What is happening there?

One possible answer to the questions above would be China running out of money. But to the casual observer that appears not to be so - the Chinese economy continues to grow at a high pace and they seem to be storing and accumulating lots of dollars there. Having all the money, why are they not using it to buy more coal? Or export less, with roughly the same results. What do I not get here?

When it comes to the international oil market, rising prices are attributed in part by increased Chinese (and Indian) imports to the extent of a 15% rise in import quantity yoy. Knowing the price of oil has doubled the past year, it shows two things: the Chinese having both the ability (money) and the intention (potential demand) to buy more oil. [I.e.: their demand is up, using economical terms.) How come the Chinese are capable of buying substantially more oil than a year ago (especially in monetary terms), and at the same time not being able (or not wanting) to buy more (export less) coal? Why is that?

One possible answer to the last question would be oil being bought mainly by the (ever richer) state and the (booming) factories and companies, and coal being bought by (more and more impoverished) individuals.... but for the time being it is mere speculation on my part.

Does anyone know the answers to these questions?

The Chinese government made some regulations about coal prices, coal freight charges, etc. This meant that it was less profitable to mine and ship coal, and more profitable to export coal. Then they regulated coal exports. A bit of a mess. We will probably have a good idea of what really happened when the data percolates outward over the next month.
I think they shut down a lot of the less regulated illegal mines in the last few years, too.

I see. Not being familiar with inland Chinese regulation I can imagine all that. I'm still lost on the magnitude, though. Exports are up, imports are down - when they desperately need coal and have the money to pay for it. We've seen strong and decisive government intervention regarding several commodities, brought about by the food crisis. This shows the ability of the Chinese government to interact if need be. So I still don't really get it. Are all the numbers above hard facts?

(Correction: In my original post I committed several spelling mistakes and a grammatical one as well. I can't edit that any more, so here comes a sidenote. Instead of 'crises' I wanted to write the singular form: 'crisis', and of course the rise in oil prices is attributed TO and not by sg. It's still early here and I was typing faster than I should have. Here is hope it didn't make my post very hard to decipher.)

First and foremost the current situation in China is probably best described as a government mistake and will be rectified. Next in general in China with both coal and oil you have some messed up domestic pricing rules that make it more lucrative to export. Finally china is a big country like the US or Canada. Canada for example exports oil to the US from the western half and imports substantial amounts in the more populated eastern half of the country. China also as this sort of dynamic going. I believe its in general the northern regions exporting coal and the more southern regions importing. But I'd have to dig this up I've read a little bit about this but don't have the facts.

Also you can't dismiss some scheme to cause a few shortages before the Olympics to get the air quality a bit better.

China has suffered more power outages then we are used to in the west with whole cities losing power for weeks. Recently because of weather but its not uncommon. So seven days of coal left is not as unusual as we would expect in the west.

Good article but its overall not a simple situation and the rapid growth makes it even worse.

Thx for your answer, memmel. I think you are right on all accounts, with the major factor being messed up (and later to be rectified) inland regulation there.

About a less related issue: I'm a big fan of your theory/model of peak oil happaning at 60-70% of the URR as opposed to cca. 50% implied by the original Hubbert-curve. I'd love to see your detailed analysis and the numbers worked out. Do you have any preliminary results yet?

Yes I do but I'm working with Nate Hagens and he will be posting soon on the Maximum Power principal. This is the basis for the proposal. On the mathematics side maximum power and the logistic equation are similar although I've not been able to make the leap if you will to show a simple relationship between the two.

However I've stolen a good rule of thumb from Hubbert and focus on 80% of total URR as the amount of oil available at a high production rate.

Next I've actually determined the error people are making and its huge of course.

The problem with using current discovery estimates is that a lot of the oil reported as reserves is coming from reserve additions well after initial discovery. This is oil added because of technical/market changes.

The problem is from the production perspective this is the only oil in the world we cannot produce no matter what we do since its located below/behind the oil we are currently producing. So it does not do you a lot of good to double the predicted reserves in a fully developed reservoir. Your free to make up any number you wish over the original estimate. This is the core reason for disconnect between reserve estimates/ discovery and production. Once you reach this new oil if its real you will find that its probably going to have a high water cut or other issues that ensure that even if its real the production rate will be low. You can see that reserve expansion and new discoveries are fundamentally different beasties and radically different under a global peak vs regional peak. The US was able to continue to use infrastructure developed using cheap oil to develop marginally profitable oil fields and more importantly technology to exploit lower quality reserves this capability migrated to the ME and is a interesting addition to Maximum Power.

Basically my extension to maximum power concept is that if you have two systems with the smaller one decaying first triggering a natural selection process the fitness gains get transferred to the larger system allowing it to grow its maximum power region. Basically extinctions events that are not homogeneous and drive themselves.

What happens is that the first region to be stressed undergoes extensive natural selection that produces new more fit species these attack and take over the original ecological niches collapsing the natural web leading to more extinctions selection events etc. No one has ever adequately explained the large scale extinction events but the non-homogeneous nature is critical and shows extinctions are a self driven event. This is why we will soon face a global extinction event. In our case its interesting since it was man via attempts at self extinction using war that drove our own selection process i.e better ways to kill each other which drove technology which fueled a huge increase in our fitness level or ability to maximize power and destroy ecosystems. We have literally and figuratively committed suicide by our desire to kill our own species.

This leads me to suspect that the initial driver for selection is cannibalism in some sort of predator species that causes it to split into a super predator that then is capable of wiping out a ecosystem. For the dinosaurs we would then hypothesis that some sort of super predator dinosaur arose that wiped out the rest. My best guess is it was a birdlike species that learned to eat dinosaur eggs. So birds probably killed off the dinosaurs. Mammals just feasted on the cracked eggs from bird attacks. Birds eating bird eggs and chicks is the self cannibalism event.

Next on a global scale which is quite different from regional peaking when you finally get to produce these reserves if they exist at all the production rate will drop dramatically since in general this is low quality production coming from watered out fields. Since oil is used to produce oil etc you get on a economic treadmill with costs exploding. This is pretty much where we are today.

Now as far as real reserves that are readily accessible you have to go back to the original predictions which are about 1250-1350GB . We have pumped I think about 1150-1250 or so. Its not clear to me yet if we should only consider 80% of the original right now I am. So that gives about 1000GB at high flow with a range of 1000-1350 depending on a number of factors. I doubt its as high as 1350. In any case at 30GB a year although we have a large margin of error we are pretty much at the decline phase. Obviously I'd like to see if I could pinpoint this better since it spreads the edge of the cliff if you will over almost a 10 year period. I believe the major production declines will happen over a much shorter two year period. We have a significant amount of the remaining high quality oil locked up in OPEC. Iraq, Iran, KSA and Venezuela along with Mexico are because of political reasons sitting on I think about 100GB or so of our "good oil". KSA is not the primary member of the group I think its got less than 20GB of "good oil" its not producing. Some of its capacity some of its undeveloped smaller fields. For Mexico is primarily small field/ Deep water undeveloped. Overall most of this oil is undeveloped and not pertinent to a near term drop.

You can pretty much use the US hit list to know where the remaining good oil is. Its Iraq -> Iran ->Venezuela. But you can see that my uncertainty is fairly well covered by unproductive reserves that are of significantly higher quality than the world average but to produce these without export land effects negating the usefulness you have to invade the countries decimate the population subdue the freedom fighters and put all the infrastructure in. Plus the oil going back into the military industrial complex needed to do this negates the addition however the invading power gets a economic boost on the military side of the GDP. In any case it pretty much ends with the military invading oil producing countries to supply the military with the oil needed to invade oil producing countries with wealth created only for the military suppliers.

With the maximum power approach what changes at the end is the quality factor.
The fact that the worlds reserve quality has dropped off a cliff can be seen simply by noting that its now profitable to mine tar at a large scale. If any other new reserves had higher quality then this they would have been produced.
In short the money would have gone somewhere else and large scale production in the tar sands would not have been viable. This is that ever increasing minimum barrel cost effect the fact its no longer excluding the tar sands should be alarming. Even oil shales are now hovering on the edge of profitiability.

These are leading indicators that normal oil production is about to take a nosedive or in my opinion already started too the last quarter of 2007.

My posts won't have any different conclusions from this. But hopefully in working with Nate we can untangle the problem. To be honest I'm now more interested in maximum power/quality and sustainable resources working it out with oil is simply a way for me to understand the equations. The oil based economy is already toast so its time to look past it.


your long and thorough post made me think a lot. I'm not sure I got everything right, but I generally understand it. (At least that's what I think.) I'm certainly looking forward to see your detailed work. (And yours as well, Nate.)

I know it takes a lot of time to get something of this magnitude 'done'. I myself am working on a concept about the differences of energy efficiency and the energy intensity of the GDP - and it is not at all easy.

So take your time and keep us updated! I'm sensing great (albeit depressing) stuff coming.

Thanks !

Just to add support that the cannibilistc nature of super preadators is critical we can look at Orcas the super predator of the oceans.

And, as their common name implies, the remains of other orcas have also been found in the stomachs of these "killer whales." It is uncertain why these animals are cannibalistic. Orcas are also known to eat the remains of other animals.

Generally in my opinion omnivores like humans have a better predator/prey cannibalistic relationship. The fact we generally only kill ourselves for sport and habitat control is simply a waste of good meat. However generally we only wipe out the male lineages and impregnate the females so that makes up for wasting the protein. Maybe once we developed rudimentary agriculture burial practices where a way to re fertilize the soil using the dead bodies. So we got more energy out of using our enemies and old as fertilizer than simple eating them directly. So the combination of impregnating the live fertile females of a slaughtered clan that where supported by the now dead males and then using their bodies as fertilizer makes up for not being in general good direct cannibals. So you can see how basic agriculture changed us from simple direct cannibalism. This carrot of adoption of fertile females instead being slaughtered and eaten is probably the balance that kept us from self extermination. You have some pretty heavy selection at least in females for those willing to join another clan and allow impregnation.

This natural selection for survival probably is why men can still treat women as second class citizens. Women that resisted where treated as equals to men and slaughtered. In men homosexual in the sense of female like traits would also be a positive so you have some selection pressure for men that can act like females to avoid being slaughtered.

In anycase although the above is off topic maybe ? You can see that in the oil industry we have the same sort of selection pressures with the Western Oil companies behaving like Orcas or humans. Many of the national oil companies take on the feminine like roles and are still submissive although not always as a mega contract but certainly via subcontracting back to western companies for technology. The role has changed from fully submissive to quasi but its still there. Also of course humans are the top biological predator exhibiting the required cannabilism but companies are a order of magnitude better than the individual or even governments. You can see that as our super national companies have refined their cannibalistic abilities that we face and extinction event as they destroy the economies/ecosytem that gave them birth.



To back off for a bit I got to thinking about burial and our love of killing people.
People make very good fertilizer and the natural place to kill is when someone is on
a ravine say by a river. Our ancestors probably had their favorite ambush spots.
When the killed travelers the travelers where probably carrying sacks of grain and other vegetables like root crops. In the battle in the mud this would be dropped along with various body parts. Making a excellent garden. So agriculture probably started along with burial based on this chance occurrence.

Since the travelers may have carried the seeds a fair distance it also created hybrid crops. And when these where ripe it acted as a trap for wandering travelers. A garden of eden.

Cannibalism in humans leads to things like kuru and new-variant CJD.  There appear to be firm reasons for the taboo.

Thats why its secondary cannibalism. You kill for the resources that a person can provide. You get a lot more bang for the buck using the body as fertilizer vs eating it directly. Plus the females have be fed too the age of maturity. At worst the ones that are reluctant to be enslaved become more fertilizer. The redirection via agriculture allows you to bypass the problem of the top cannibal falling prey to direct pathogens like kuru.

In fact these pathogens exist because of the cannibal effect. Via agriculture we managed to bypass the natural control on over population not just because of the food value but also because of the fertilizer effect. On the opposite end of the spectrum is the nigth soil issue.

In any case the key point is that a cannibalism esp if its a omnivore can survive ecological collapse since its both predator and prey. We for example can and do exist in a very simple ecological environment consisting of less that 100 critical species. Wheat rice, cows, pigs sheep, goats, beans etc. We don't need a complex ecosystem and if pushed we can eat ourselves. Worst case is you need rice, beans and people. This is how some bird made it through. However as you point out once specialization is reduced the chances of major die offs from disease grow dramatically either via direct transmission or some other vector. For us at least its a chilling result since what ever top predator was created that killed of the dinosaurs some omnivore bird it completely died out soon after firts from direct diseases and then via speciation filling the truly empty niches since the omnivore was not a specialist and would lose in and particular niche.

Back to oil coal etc this is why the mega-corporation collapses after it destroys all its enemies if you will.

Back to the Chinese by underbidding everyone on production of goods at some point no one is left to buy the goods. Oil suffers a similar fate post peak.
Buy continuously pricing in the real value as peak oil goes mainstream at some point you simply don't have any more costumers. Demand destruction will eventually happen for oil but as you can see with my above thesis only well after you have passed complete destruction and the winners lose.

Elasticity of demand for oil is complete and utter nonsense demand and demand destruction is a compression phenomena. Like compressing a massive spring you push and push with greater pressure and eventually all hell breaks loose. Or the cracking over a critical beam in a bridge. Its not elastic but eventually suffers catastrophic failure. High prices don't cause stretching they cause compression. The stupidity of treating them as a elastic phenomena is beyond dangerous. But this is not surprising since its a concept from economics.

Memmel, good stuff, thank you for the theory, it helps explain a lot of how the world connects together.

There are several underlying truths in the world and these are some of them.

I have quite unexpectedly suddenly learned a lot in a very short space of time. Thanks.

It does not do you a lot of good to double the predicted reserves in a fully developed reservoir. You are free to make up any number you wish over the original estimate. This is the core reason for disconnect between reserve estimates/ discovery and production

Gripping stuff --- why didn't I think of it before? Once said, it seems so obvious that I wonder why it took me four years reading about peak oil to find someone who said it. I've been pondering over it for the best part of an hour. I wonder could you at some stage draft it in some kind of PowerPoint style (bullets, etc.) so as to hammer the message home? A lot of readers probably don't have the necessary attention span to digest your contribution as it stands.

I reckon I'll be having nightmares about predatory flying dinosaurs tonight.


Another way to look at it thats related to Maximum power is simultaneous reserves or active reserves. I prefer to call them real reserves. Given that we produce about 30GB of oil a year and we have been able to keep production basically steady with 3mbd or so of new production brought on line. You get a pretty simple quick estimate of 1md == 10GB of backing reserves. This is a maximum. I also get a similar number looking at field production histories and URR.

So for 30GB a day we have at most 300GB of active reserves backing our production. This is inline with a world URR of about 1350 or so as Hubbert predicted. Now you can deplete this number and still keep production up. And of course new fields refresh it. But we could be as low as 60GB given the assumption that you can maintain high production rates to 80% depleted.
I think we will see production declines well before we hit that level since the 80% is more of a per field result I'm not sure its correct for the globe.

In any case if your not adding new oil and you start with the 300GB at 30GB a day your depleted in 10 years or a 10% depletion rate which is not insane.

Using other numbers.

And you know dammed well that we have not found any 10GB+ fields recently.
Then you know the 99GB for OPEC which is half the entire amount of reserves ever found in the US over 100 years is dog poo not even paper barrels. The non opec 29 at least rates paper barrel status.

In any case using the 1:10 rule with a cumulative was about 950 in 2000 (note I did not find the exact total cumulative for that year ) 950+174 = 1124. The point is we burned through 174GB of oil with no major changes in production rates. We brought online about 3mbd or so of new production per year or about 1GB a year over 6 years this is 6GB using 10:1 rule give a maximum backing of 60 GB. Now assuming Non OPEC paper barrels are better than OPEC this gives OPEC additions of about 30GB perfectly inline with the performance of non OPEC countries or at least at the same paper barrel level.

The other 60GB's where probably created at the camel races.

But you can see over this time period we went down at least 114GB with 60GB of suspect additions. In my opinion probably more like 10-20GB of real new oil with the rest coming from pushing production and typing on paper.

So back to the 1350-950 gives a 400GB reserve backing over the period or using 10:1 a max production rate of 40GB a year or close to the 100mbd or so that some people claim is possible. You can see how its fits with the 10:1 rule. And you can also see that 10:1 is a sort of maximum.

In any case the majority of the remaining oil is in Iraq Russia KSA and Iran probably in that order. With I estimate at least 100GB not being actively produced for political reasons primarily in these countries. This gives 300GB
and we are back in line with the 10:1 max or about 10 years of active production. Figure right now we are at 1060-1100 in production this gives 200GB. Lets say high production rates for on 70% of this gives 140GB/30GB or
4 more years of high production before we reach say 50% of our current rates.
Obviously even if production crashes assuming a decline rate to say 15GB a day in 4 years gives a 15/4 == 3.75GB decline or 13mbd decline rate.

I tend to put it at 10mbd per year or a 11% initial decline rate. 3 times higher than other estimates but not insane. A simple replacement of 1GBnew/30GB
gives 3%. Thats a real 3% underlying decline rate on production that should still be effectively flat if not increasing with the max of my pessimistic approach of 400GB of real reserves left.

In any case this approach is way to rough for the level of reserves we have left but given what I'm saying and the fact that a good bit of the oil is in Iran and Iraq say about 100 GB or more if you could pacify the two countries probably eventually via all out genocide they would represent probably close to 25% of the worlds oil production if not more if it declines like I think it will. If you take into account export land effects its probably not sufficient to encourage these countries to produce peacefully since the populations are high enough that exports would probably not be at the needed level. You pretty much have to either impoverish or kill the local population.

You would think one of the super powers would do everything in its power to control this oil. Russia is the other big oil producing nation so they pretty much get a lot of the rest of production by default and it has nuclear weapons.
You would think that Iran and Iraq if they figured all this out would be hell bent on obtaining nuclear weapons to protect themselves within the next 10 years before they get invaded.

Maybe one of the other super powers has this all figured out and is doing the obvious and taking control of Iran and Iraq. However regardless if these two countries are not quickly brought up to maximum production I'm not sure what the bottom is it wont be 40mbd like my calculations say since you need these two Iran and Iraq to ramp up production yesterday and impoverish their populations like Nigeria.

But to finally finish this approach is simply to rough to capture the current situation its got errors as high as 100GB or 3 or more years of production the error term is 30% of the potential remaining oil. So we could crash now like I'm thinking or hold for a few more years then go down. I don't see and significant increases possible we barely have the reserve base to sustain current production and the distribution of remaining reserves is a huge issue.

Memmel, an interesting series of posts. I've been away for a few days, and still am, so I'm a bit late to the party. Look forward to the post that you and Nate are preparing on Max Power. A few queries...

Extinction of dinosaurs Interesting to have an alternative theory and I'm aware that the asteroid / commet theory has holes. But you will have to address this issue. Extinction did not just involve the dinosaurs but thousands of other species / families. I'm not convinced that egg eating canibals will have upset the whole eco-web.

Human fertilizer Not convinced about this in either literal or metaphoric senses. The removal of threat would be sufficient argument for me for destroying competitors. And what time period / time frame are you talking about?

And would you care to comment upon the impact of religion upon human society behavior in this regard. We actually bury or burn our dead and I'm not aware yet of rendered humans being sprayed on fields. Maybe I got the wrong end of the stick?

Elasticity Can you expand upon your comments on stretching and compression. I think this is interesting but don't quite grasp what you are trying to say.

I think we have seen widespread demand destruction already throughout the energy sector based on poor people being priced down or out of energy consumption. Many / most of "us" are just continuing as normal - perhaps making a few discretionary energy savings on the way. Prices are in the zone now where conservation counts. Right now I see this trend continuing and see the main immmediate threat from the disenfranchised getting mighty pissed off (groups of poor people in rich countries and groups of poor countries) combined with inflationary pressures that could cause socio economic disruption but not collapse (yet). How long this continues I don't know. Two to five years I'd guess. What happens after that?

Now let's come back to the coal and see how the decline of oil production will impact on transporting coal. I have read somewhere 50% of Chinese coal is transported by truck but I guess that would be from smaller mines and over shorter distances.

How about bunker oil? Who is an expert here? We could well have the situation that bunker oil shortages will limit the volumes of coal exports which would be good news for our climate.

Once shipbuilders understand peak oil, they won't even build more coal ships.

First and foremost the current situation in China is probably best described as a government mistake and will be rectified.

I think it's a lot worse than that. The government has set finished electricity prices that do not cover the current cost of coal. Many facilities are losing money, many more will be losing money. With poor cash flows... they cannot borrow and they can no longer finance inventories. This means grid problems followed by price shocks.

A 7 day inventory situation is dangerous. Remember... electricity pumps the water, moves the sewerage, runs the traffic signals, keeps the food from spoiling, powers the media...

A big issue here is the power sector. The power sector consumes half of Chinese coal production, but power prices are controlled, and prices have been frozen as part of the effort to keep down retail inflation, which has been hit particularly hard by food price increases. Power plants are balking at paying the higher coal prices since they can't pass the increases on, so "maintenance" has become a regular occurrence as power producers avoid going further into the red. The export market offers higher prices to coal producers, and despite government measures (such as the export quota adjustment earlier this year), coal exports have risen. With many of the major coal producers such as Shenhua and Datang now listed on stock exchanges, decisions on profitability have coincided less with national interests than with corporate interests.

In the last power crunch in 2004-5, diesel imports soared as power-short companies turned to diesel generators for power. This time around, however, diesel import prices are considerably higher than in 2004-5, and low domestic prices have led to tightness in domestic supply. Part of the surge in diesel (and oil) imports is related to demand from generator power producers, but part is also related to the government's increasing the requirement of wholesalers to have 15 days of supply in inventory starting May 1, up from 10 days previously. Another big driver of the demand increase is trucking to move the coal that the rail system can't handle.

China was a net importer of coal during parts of 2007, but ended the year as a whole a net exporter of 2 million tonnes. Even then, their decrease in net coal exports in the previous 3 years removed 80 million tonnes from the regional coal market, substantially strengthening regional coal prices.

Thanks a lot.

Your first paragraph answers most of my questions. It is indeed about inland regulation there. I think I understand now. I have two questions remaining, though. You wrote:

China was a net importer of coal during parts of 2007, but ended the year as a whole a net exporter of 2 million tonnes. Even then, their decrease in net coal exports in the previous 3 years removed 80 million tonnes from the regional coal market, substantially strengthening regional coal prices.

1) What are the projections for 2008 and 2009 regarding Chinese coal exports/imports. (Net exports.)
2) In early 2008 we saw the overall trend come to a (presumably not permanent) halt: exports increased and imports decreased - making China more of a net coal exporter than it was in some parts of 2007. Furthermore, it happened at a time when they need coal the most at home. Why do you think the government failed to intervene?

2) In early 2008 we saw the overall trend come to a (presumably not permanent) halt: exports increased and imports decreased - making China more of a net coal exporter than it was in some parts of 2007. Furthermore, it happened at a time when they need coal the most at home. Why do you think the government failed to intervene?

It appears that the government did intervene. The government was concerned about the effect of inflation upon the public, and as a result, instituted price controls on the sellers of elctricity.

This intervention is the cause of the increased exports and decreased imports.

So the question is, in what way are you imagining the government to intervene? If they were to take the price controls off the electricity producers, they would certainly have the incentive to increase their imports. The chinese government is concerned enough about inflation to not do this. The cause of the irrational inventories is the existing government intervention, and that would be the point.

I doubt it is the whole story however. Infrastructure bottle-necks may be worsening, for example. I dont really know, i'm just an interested observer.

Thanks for the clarification, guys. I'm interested in the Chinese coal situation, even though I don't yet know too much about the details (as you've clearly shown me ;-))

In 2007, the export quota for coal was 70 million tonnes; for 2008, the first round of quotas have been issued at 31.8 million tonnes, or 25% less than last year. For the entire year, expectation is for a total export quota of 53 million tonnes, 17 million tonnes down from last year. On a net basis, it's harder to say, since coal imports are not subject to this same kind of quota control, but the market situation for coal suggests imports will grow, since production is having difficulty growing as fast this year and demand is expected to rise another 150 million tonnes.

As others have noted, the government did intervene by trying to halt all exports in January and part of February, but in the end, the government simply doesn't have total control as some people assume. With most of the economy now out of state hands, and the government lacking the levers of control as before, sometimes they simply are ignored. They do, however, continue to control electricity prices, since inflation control at the top of their policy agenda this year.

That's fascinating.  The mis-management by Beijing might yet lead China to collapse, or at least serious social unrest.

What Beijing might do to divert attention from mismanagement... aye, there's the worrisome thing.

I think the import/export confusion may be also because of old long term contracts. As far as I remember traditionally much coal was delivered on such old long term contracts with a partly fixed price, which go up to five years, although there is a recent trend towards spot market prices (as exporters want to cash in on the rising prices ;->?)
As China just recently became a net importer you may imagine that still quite a few vessels are leaving China due to these old contracts, confusing the picture. I remember that during the winter crisis reported that a Chinese coal vessel had arrived in Australia(?) - and everyone was surprised that they stuck to their contract at a good old two-digit price...
I might imagine that (after the olympics) China will increasingly concentrate on the supply of its own people, and thus increasingly limit or even stop exports. They already implied instruments, which sound weird from a "growing economy"-perspective (e.g. export taxes). So I wouldn't be surprised if China (and other countries) would make quite a few steps down from the list of "top exporters" for quite a while - until the internal supply problems are sorted out.

Putting the Chinese coal imports and exports into some perspective, China consumed 2.62 billion tonnes of coal last year - approximately 1/3rd of all world production.,25197,23204577-5005200,00.html

A few million tonnes exported is a small drop in the ocean compared to their consumption.

On my last trip to southern China in March, electricity shortages were still prevalent, with the factories resorting to diesel generators as a back-up supply. With diesel fuel costing about $1 per litre, there was considerable resistance by factory management to run the generators as it pushed up power bills and production costs considerably.

Electricity prices have been capped in China, whereas coal prices are rising inexorably, there is reluctance amongst power station management to maintain large stock piles of coal because of the costs involved and lack of electricity sales revenue compared to rising fuel costs.

Electricity costs about $0.06 per kWh in China, whereas large diesel generation will be at least $0.25 to $0.35 per kWh.

70% of the cost per kWh is the cost of the fuel. A tonne of coal at $100, will generate 2575kWh of electricity, so the fuel cost alone is nearly four cents per unit.

70% of the cost per kWh is the cost of the fuel. A tonne of coal at $100, will generate 2575kWh of electricity, so the fuel cost alone is nearly four cents per unit.

Do you have a reference for that? I would be very interested since our utility uses Powder River Coal which has increased by 50% per ton over the last year, albeit it only costs $15 per ton. In any event, our utility prices have only gone up a few percent over the last year and that was unrelated to coal prices. So, if what you say is correct, I do not understand why we haven't seen impacts here on utility prices.


My reference regarding 70% of production cost was the fuel came from this excellent report on the Chinese Electricity industry

Dated 2006, it will be several tens of GW out of date.

My figure for the power generated by a metric tonne of coal was based on a calorific value of 9kWh per kilogram of coal and a generating efficiency of 28% - which is typical for the average Chinese thermal plant.


North America is a net exporter. The U.S. imports about 36 million short tons per year,and exports 59 million short tons. China is a net importer.

Yesterday's Drumbeat linked to an article
claiming that Indonesia, in 2006 the world's second biggest coal exporter, could see its exports fall to zero by 2015.

Eventually, all nations will have energy independence thrust upon them.

This is just further proof that we need to shift our focus to renewable energy sources. Even big oil companies, such as BP, and investment banks, like Credit Suisse and JPMorgan, have begun to notice, and have devoted more and more time and resources to renewables. If you'd like to learn more, I suggest you check out the Renewable Energy Finance Forum, held this June in New York City.

The Renewable Energy Finance Forum brings together financiers, investors, and renewable energy project developers to network and share ideas on the future of the industry. Speakers will include over 40 of the highest profile indusry leaders, discussing topics such as solar power, wind energy, biofuels, market drivers, and more.

For more information, visit

I expect a coal crunch is a logical outcome of all of the growth in China and the inability of China's own infrastructure to mine enough coal, plus the difficulty of importing enough. The cold winter may have pushed the crunch forward a year, if more coal was required to heat homes (or make electricity to heat homes).

As less fuel becomes available for import, Chinese growth will have to slow down. This may make Chinese production more in line with what they need themselves, with less available for export.

I think there is a general overestimation of how much China's energy consumption is driven by exports. The main source of this confusion is the common practice of comparing China's export income to GDP, and indeed, the ratio is high. However, GDP is a value-added measure, while exports are a gross value measure, so it's not a good comparison. A recent study attempted to put China's exports on a value-added basis and found that it was only 10% of GDP, meaning that that vast majority of China's economic activity is domestically driven. This is consistent with the dramatic rise in domestic consumption I've witnessed there over the past 30 years.

China will undoubtedly face import constraints for coal. Its largest import source--Vietnam--plans to halve exports to China this year because of their own rapidly rising power demand and the completion of some new power plants, and exports are planned to go to zero. Indonesia is the second largest source, and it will increasingly divert its exportable surplus to domestic use as coal increasingly replaces natural gas in power gen. Australia isn't facing a resource constraint on increasing exports, but definite political and environmental constraints. At the same time, India plans to dramatically increase coal imports and expects to source it from Indonesia as well. I think China will hit the wall on coal sometime between 2012 and 2015.

Might be time to short the tanker and bulk cargo carriers ..
If the Export Land model is correct and it also applies to coal; then there won't be as much demand for ocean transport of these commodities going forward ??

Triff ..

With a great deal of effort, maybe we can convert the ships to substitute for all of the airplanes that won't be in use then either. I am afraid people wouldn't find them very attractive, however.

While the US fights an endless unnecessary war in Iraq that continues to require new funding that pushes us farther into debt, and our economy expands at an anemic rate of 2%, the chinese economy seems unfazed by our recession and continues to expand at a rate of 10% or more per year. They run surpluses while we talk about deficits. They increase the size of the military while ours degrades in a foreign land. The Chinese do not waste time fighting innane skirmishes, instead they build huge cities and damns.

Deffeyes wrote about Chindia (china & india) and how their rate of expansion is such that the math simply means they will pass us by in not too many years. Meanwhile that means greater need for energy in the form of coal and oil. As Chindia expands and the US contracts, their ability to pay for ever higher energy costs will increase while ours will decrease. When crude extraction descends on the other side of the peak oil bell curve, we're going to be wondering what we did wrong.

We took our eye off the ball, which is manufacturing. Both England and the Dutch are countries that at one time had a large manufacturing base, and they both borrowed against their wealth, while their manufacturing base dwindled and eventually their economies fell into obscurity. The US took their places and now it appears that Chindia will replace us as the strongest economy in the world.

So if you wonder why oil and coal are getting more expensive because supplies are tight, you'll know why.

Back in 2005 the New Yorker magazine ran a 2-part article about the coal trains that run from northwestern USA to power plants in the east. I only saw part of one of the articles, but I was astonished at the volume and just-in-time nature of the transport. The scale of coal mining and shipping to maintain power plants in USA is mind-boggling, and must be even more so for all of the Chinese plants.

Does anyone have a link to those two articles that gets behind the paywall? Thanks.

I'm a bit late on this thread, but it's my favourite topic. China is targeting 3 billion tonnnes of coal production by 2010 to keep economic growth rates at double digits. This years 50 year record snowfall was a mere stumble in blocking coal trains from the North to the South East.They are building around 50 coal fired power stations per annum and about 5 or 6 nuclear power plants pe annum to give 100 Gigawatt increase. It is truly mind boggling to see the fast track industrialization occurring before our eyes. Some recent achievements:

They put a man in space recently. Only 3rd country thus far.
Built the Tibetan Plateau railway. Highest altitude in the world.
Have the only commercial Mag Lev train running daily in Shanghai.
Just started the Bejing - Shanghai High speed rail line ( 1300km - 350km/hr). 5 year target to complete ; will move 80 million people per year. Cuts travel time from 12 to around 5 hours.
Just completed the longest over water bridge in world (36km)outside Shanghai.
Just finished the new massive Bejing Airport in 5 years.

This site in a bit too US focussed. Your time is fast running out. You need to check out what is happening in the rest of the world. If you don't bomb China back to 1970 she will overtake you by around 2018. Go and have an unbiased look.

"If you don't bomb China back to 1970 she will overtake you by around 2018."

But it looks like what China is doing is mindlessly marching forward to an energy crisis. What's going to power the flights at the brand new airport? And the high-speed long-distance rail route? And the long journeys over that bridge?

They seem to be doing a sufficient job of bombing themselves with future-destroying investments.

hello, this is my first post here is a very interesting article about (peak) coal
using Hubbert linearization it predicts that future production of coal will amount to around 450 billion tonnes (little more than half the current official reserves)
my question is: how much coal has been produced worldwide up until this date? I've looked a bit on the net but couldn't find it