Three reports on the energy industry in the same 24 hours defy reason:
- There is an oversupply of coal and excess coal production capacity. ("Australia coal firms dig in for years of mine closures, job cuts")
- Australian manufacturers want a return to protectionist economic policies - a "reserve" of natural gas at below market price. ("Manufacturers call for domestic gas reserves")
- The Australian natural gas industry wants government help to increase investment and production. ("Red tape limits oil and gas industry productivity")
What's wrong with that:
- Coal mining investment has exceeded realistic levels for the global market.
- The natural gas industry wants government help to increase investment - presumably so it too can exceed realistic demand levels - just as the coal industry has done.
- Excess coal production capacity is ignored by manufacturers.
A rational answer:
- Pursuing investment in even more natural gas capacity will aggravate the coal industry's downturn.
- Converting excess coal into synthetic natural gas solves the excess coal capacity problem. See making natural gas cheap.
- This avoids wasting investment in even more unneeded energy capacity in the natural gas industry.
|Gas Flaring - Disposing of natural gas keeps prices high|
And some industry spin trying to induce even more over-investment:
- ABC News ran a report - "Coal demand expected to boom" - suggesting the coal industry remains a safe investment - just a few days before:
- Reuters reported "Australia coal firms dig in for years of mine closures, job cuts".
- A report "...commissioned by the Australian Coal Association estimates half the coal being exported through Newcastle is being sold at a loss". (Link 1: "Coal companies desperate to dump port capacity") (Link 2: "Coal companies desperate to dump port capacity")
- A further ABC News report corroborating news that the coal industry has expanded its production capacity beyond reasonable forecasts of the market for coal. ("BHP Billiton has no planned projects, is selling assets on weak coal price outlook")
- And more recently - a further report again corroborates news that the coal industry has expanded its production capacity beyond reasonable forecasts of the market for coal. ("'Grim outlook' - coal miners axe jobs") -
"Peabody Energy Corp and Glencore Xstrata will cut around 500 mining jobs in Australia as a global glut in coal supply pushes down prices.
Anglo American chief executive Mark Cutifani said today the outlook was grim for mining as companies adapt to lower prices and weakening demand."