Saturday, May 8, 2010

China and Coal

For a long period of time, China was predominantly an exporter of coal. However, this coal consumption pendulum has swung from an exporter to an importer of coal. This has pushed up the price for coal. According to golbalCoal (an international trading platform), the benchmark price at Australia's Newcastle port for the type of coal burned at power plants (thermal coal) hit $108 a metric ton, which is the highest price since October 2008.

This shift from exporting to importing coal began last year. In fact, China's imports of coal jumped 165% from March 2009. It seems this level of consumption will remain. Even though China has been pushing for alternative energy solutions, such as wind and solar, 70% of China's electricity comes from coal-fired power plants. This is demand is expected to expand by 10% for this year.

There have been a variety of factors that have created China's demand for foreign coal. There has been a drought in southwestern China, which has made the rivers too low to power its hydroelectric dams. Also, there have been several mining accidents that have slowed production as the government is cracking down on safety violations. However, it is possible that this pendulum may swing back to China being an exporter of coal. But, one thing remains certain is that China's demand for coal will increase as it continues to run its factories to supply products to the world economy and also to its growing middle class. China needs a lot of electricity to run these factories and coal still remains the primary source of to create such electricity.

Data Source: Wall Street Journal.

Monday, May 3, 2010

How much does a gallon of gas cost?

Many of us are watching from a far the ecological, economic and human tragedy that is unfolding in the Gulf Coast. People are throwing out numbers of the cost to clean up this oily mess in there to be in the billions. BP has stated that it will take full responsibility to pay for this clean up; however, as this cost grows, I am not sure that humanitarian and ethical stand that BP is taking now will remain. In fact, BP may have law on its side that caps the liability of oil companies from these types of events at $75 million. So if the law is on BP's side, who will pay the rest of the tab? Yes. The American taxpayer.

This made me think about the real cost for me when I fill up my car with gasoline. The gas pump says $3 a gallon. That must be the real cost. Right? Nope. There is study by the Institute for the Analysis of Global Security, which claims we are paying a lot more than $3 a gallon ( According to this articles, when you add the tax breaks and subsidies we provide to the oil companies along with the foreign aid to the oil rich countries and the defense costs for securing these regions, you are actually paying $5.28 a gallon.

The response may be is that we need to extract oil domestically; however, all of those off shore oil rigs peppered throughout the US coastline, including the BP's oil rig, do not extract the oil for US consumption only. That oil goes onto the world market where other countries consume the oil.

The fact is that we must stop making compromises on what needs to be done. Does further off shore drilling make sense when the mistakes are too large? Are we going to learn that we have no right to take certain risks that can wipe out species that have no say in our decisions? Can we start committing to other real alternatives and force us to got off oil? I do not know the answers. I believe many of us have the fight in us to get off this oil addiction and, perhaps, this other Gulf Coast disaster will convince the rest of us that we need to stop this addiction too. We keep on saying it, but we do nothing. Unfortunately, we have to have a natural disaster like this to admit that we have an addiction and we need get treatment. Also, unlike many things, the literal and figurative residue of this natural disaster will not disappear for a very long time and will remind us again and again what type of damage our addiction is causing to other species.