Energy Shortage Will Go Global as Winter is Coming

China’s Vice Premier Han Zheng had ordered all power utilities to make sure they have enough supplies of raw materials, including coal and oil, for the security of power supply during the cold season—whatever it took.

China has already had rolling blackouts for consumers and retailers and outages for factories.

Oil prices could surpass $80 per barrel and coal prices are up from $100 per ton to $190 ton.

Last winter China needed 16% more coal for winter heating from Jan-March. China churned out 970.56 million tonnes of coal between January and March in 2021 which was up from 829.91 million tonnes in the same period in 2020.

There are already shortages of coal, oil and gas and demand will go up by 50 million tons per month in China alone in the winter months.

A German power plant had to shutdown because of lack of coal.

This is an insanely difficult problem to solve and it will make the current crisis worse.

China is not producing nearly enough of its own coal. Normally they are producing 90-95% of what they need.

Australia exported 3-13 million tons per month of coal to China in 2020. If China needs 50 million tons per month that is rapid increase in coal production. It is unclear in China and Australia would be able to ramp to meet the demand. China is already in a shortage of perhaps 50 million tons per month.

If there is a rapid surge in coal importing to China, there could be overbidding that causes shortages for other Asian countries. This will also make the supply chain problems even worse.

Prioritizing heating over electricity means more factory shutdowns.

Prioritizing heating coal imports over other supply chain means that the 200 ships waiting to get unloaded get bumped back at the ports for hundreds of coal ships.

China having coal production problems is tough because building other sources of electricity and heating will take years. Especially if China wants to get beyond current levels to support 6% per year GDP growth.

SOURCES – Bloomberg, Oilprice.com
Written By Brian Wang, Nextbigfuture.com

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