The blog text is written in Swedish but most of the blogs will be translated to English by Michael Lardelli. Michael is Senior Lecturer in Genetics at The University of Adelaide, but is also an activist for spreading awareness on the impact of energy decline resulting from oil depletion (ON LINE opinion). He learned Swedish during six years of postdoctoral work in Stockholm and then Uppsala. Since a growing number of international readers are reading the blog, the English text will be on top whenever I get it.
I also like to stress that the opinions you find on this blog are my personal opinions and not statements of ASPO or Uppsala University.
January 1, 2009 at 6:52 pm |
My thanks to Michael Lardelli for translating this blog into English!!
February 27, 2009 at 5:19 am |
The report Coal: Resources and Future Production by Energy Watch Group poses several significant concerns for future coal supply. However, there is little literature on the subject.
The IEA makes an excellent point in stating that, due to historically low coal prices and large reserves, countries have little incentive to present updated, reliable reserve data. Also do to lower coal prices and large reserves, coal producers have little reason to expand their recoverable reserves. We are relatively confident that oil and natural gas are near peak production, since high prices have failed to stop oil production from leveling off in 2005. Because of this, supply predictions are becoming much more accurate. However, while coal prices have increased in the past several years, global coal supply increased with demand. Because of this, future coal supply is more uncertain, since there is little evidence that coal production is bumping up to geological constraints.
While reserve data for coal is questionable, in light of the importance of coal to the global economy, it is essential that credible experts, possibly a group of peak oil analysts, issue a series of extensive, in-depth reports on future coal production. If it is found that global coal supply is likely to be restricted in the near future, then a follow up report on the economic impacts of peak coal would be necessary. While we can infer that peak coal would result in increasingly high electricity prices, increasing manufacturing and services costs, and declining economic growth in many areas, there are no studies on the issue. I understand that ASPO is currently gaining gaining influence. Thus, it is necessary that the ‘peak oil network’ use this influence to increase awareness of the possible threat of peak coal, if there is a threat of supply restriction.
March 9, 2009 at 9:56 am |
Kjell – A good lecture at Aberdeen Uni.
Very thought provoking. As a scientist working in the oil industry I will start researching the issue in much greater depth.
Keep up the good work!
March 10, 2009 at 4:16 am |
I have some concern about forecasted coal production rates. Yes, those irritating factors that continuously change with every annual prediction by the EIA. However, they play a vital role in calculating the peak of resources. Let us take for example the Energy Watch Group prediction that U.S. coal production will ‘peak’ near 2025. (Of course, as the Uppsala study on future U.S. production points out, production in Montana may be able to continue a growing supply of U.S. coal for several more decades.) But, the EWG example is quotable. “…total (volumetric) coal production will peak between 2020 and 2030. The possible growth to arrive at peak measured in energy terms will be lower, only about 20% above today’s level.“ So, the EWG predicts that coal production may peak around 2025. However, this assumes that U.S. coal production increases 20% by 2025. However, according to the EIA Annual Energy Outlook 2009, coal production in the U.S. will only increase roughly 3.8% from 2007 to 2020. If the EIA forecast is true (perhaps probable due to continued economic recession) then could that not delay the EWG peak coal estimate by over a decade? I ask this with concern for the validity of a report I am currently writing on the subject. I have noticed that the Uppsala report on future U.S. coal production seems to assume that coal production from 2007 to 2020 will also increase roughly close to 20%. How does this reconcile with the EIA forecast of only 3.8% till 2020? I greatly appreciate this blog’s speed in responding to my last entry. Keep up the good work!
March 16, 2009 at 10:52 am |
Dear Concerned Analyst,
Naturally a decreased production rate would potentially postpone the peak, but a economic recession might also decrease the reserves and thereby compensate.
It is also true that EIA has adjusted their forcast down quite much now. The lower growth rates will naturally postpone the peak if the reserves remain at present levels, but lower production also means less energy for the society. Also note that logistic curves are useful for determining long-term trends that span over several decades and should not be used as a replacement of meticulous short term economic analysis. In 5-10 years economic factors are probably a greater factor for coal production that reserve limitations, but in the long run geological factors will dominate. The details around or model is described in our latest coal publication. You can locate the study here:
http://www.tsl.uu.se/uhdsg/Publications/USA_Coal.pdf
March 18, 2009 at 12:06 am |
Let’s assume that the first Uppsala global scenario, assuming that reported reserves do not expand, is correct, and global coal production starts declining 1% per year after 2030. Then, lets assume that the EIA prediction that global coal consumption will increase 1.7% per year after 2015 is correct. Assuming that these two trends occur, by what range can we expect coal prices to increase per year? Oil prices are somewhat easier to expect after global peak, since we had a roughly similar, brief experience in the 1970s (due to a global reduction of supply of roughly 3%, plus oil hoarding and government interference). However, besides the coal price increases of 2008 (which are much more harder to quantify) we have little precedent for how much exactly coal production and demand effect prices. So, how much would a 2-3% coal deficiet increase per year increase coal prices per year, roughly. I have no way of infering how to calculate a safe price increase range. While estimating how much coal prices will increase is hard, estimating the resulting electricity prices will increase is much more difficult. What are the possible minimum and maximum annual coal and electricity price increases that would result from a 2% coal deficiet increase per year?
March 19, 2009 at 8:59 am |
Dear Concerned Analyst,
Now you are treading a very dangerous path. Prices are an economical property and therefore very non-linear and hard to predict accurately. Some have even managed to prove that long-term price forecasting is pointless and impossible. Prices do not follow natural laws, physical relations or even logic.
A 2% deficiet of coal do not necessarily lead to a 5% price increase. The relation is much more complex and dynamic than that. The prices could very well rockey through the roof and then collapse, just as we have seen with oil, before starting to rise again. Price volatility is probably a much better conclusion as too high prices tend to undermine the market and cause a collapse.
To summerize I would say that you cant calculate a “safe price increase range” and the very existence of such a concept is problematic. You can however draw the conclusion that coal supply will decrease in the future, but remember that prices are also dependent on market forces and demand. How demand and market forces will behave is virtually impossible to predict. Instead of talking about a price increase I would recommend you to talk about only about supply deficiet and speculate on possibile effects on price. A minimum and maximum price increase can not be safely predicted from just supply trends.
April 25, 2009 at 3:29 pm |
Are the slides from Professor Aleklett’s Aberdeen address available? I’ve looked at the sites he listed at the end but have not found them.
Thank you!
June 15, 2009 at 5:07 am |
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