Little-Acorn
Well-Known Member
I did a major double-take when I saw this headline. China running out of coal is like Saudi Arabia running out of sand. They have countless tons of it over there. I was there a year and a half ago, and all you saw were coal trucks, coal trains, running back and forth, full to the brim, and people building new coal-fired power plants right and left.
Then I read further, and guess what jumped out at me: Government price controls.
Yep, there is no coal shortage in China. There's just a shortage of common sense in government. Apparently the govt thinks the coal companies have a money tree, that they can just pick money off of when their receipts for selling coal fall short. Alas, apparently the money tree didn't bloom to well this season.
(Rush Limbaugh once said that if we really want to destroy our enemies, we don't need to use nukes. All we have to do it export liberalism to them, and they'd be dead within a decade. How often has he made joke, only to have them become the truth within a short few years?)
China has plenty of coal. But the govt has declared they can't charge enough to cover their costs... which the govt did NOT control. Now coal producers apparently have a choice: They can either stop paying their miners, or stop paying their refiners, or stop paying their clerks, or stop paying their transportation, or etc. Either way, no coal gets to the power plants, no matter how much there is.
I especially like the last line here. The govt proposes to punish coal companies who don't meet their contracts, by refusing to allow them to produce MORE. Isn't that sort of like tying someone's hands together, throwing him in a deep lake, and then telling him that if he can't tread water adequately you'll tie both his hands and his feet next time?
Their tax yuan at work.
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http://finance.yahoo.com/news/Chine...4.html?x=0&sec=topStories&pos=2&asset=&ccode=
Chinese endure power shortages as coal runs short
Chinese enduring power shortages, rationing as power suppliers run short of coal
by Elaine Kurtenbach, AP Business Writer
Monday December 20, 2010, 9:17 am EST
SHANGHAI (AP) -- Communities in central and northern China are facing power cuts and rationing as winter coal supplies fall short of surging demand.
Cold weather and transport disruptions typically cause shortages most years, but the problem has been complicated by coal producers' unhappiness over price controls that are crimping their profits.
China's State Grid, the government power provider, said in reports seen Monday on its websites that recent winter storms had pushed demand higher while worsening traffic bottlenecks, hindering coal deliveries.
Phone calls to the State Grid's branches in central China's Henan, Shanxi, Shaanxi, Chongqing and Hubei provinces -- the areas reportedly worst affected -- rang unanswered Monday.
China depends on coal for more than three-quarters of its electricity and also to fuel centralized winter heating systems in northern cities. Spates of unusually cold weather often strain supplies, with power rationing not uncommon.
About 620,000 households were left without power due to bad weather in Zhejiang, a province west of Shanghai, a report on the State Grid website said. It said power was being restored.
Coal suppliers have also held back on shipments to power companies because contract prices for coal are below market prices, a chronic problem in this state-dominated economy. China has had similar troubles in maintaining supplies of gasoline and diesel fuel, as refiners balked at selling at below-market prices.
"There are troubles with resources but also with the market," Han Xiaoping, an official at energy information provider China Energy Net, said in a report posted on its website. "Costs are rising daily, but coal prices are strictly controlled, so suppliers cannot cover their costs."
China's consumer price inflation hit a 28-month high of 5.1 percent in November, prompting the government to tighten controls on prices for some key commodities.
The National Development and Reform Commission, the country's planning agency, recently ordered coal suppliers to extend contracts set for 2010 into 2011, without raising prices.
It warned companies that fail to fulfill contracts will not be allowed to increase output capacity.
Then I read further, and guess what jumped out at me: Government price controls.
Yep, there is no coal shortage in China. There's just a shortage of common sense in government. Apparently the govt thinks the coal companies have a money tree, that they can just pick money off of when their receipts for selling coal fall short. Alas, apparently the money tree didn't bloom to well this season.
(Rush Limbaugh once said that if we really want to destroy our enemies, we don't need to use nukes. All we have to do it export liberalism to them, and they'd be dead within a decade. How often has he made joke, only to have them become the truth within a short few years?)
China has plenty of coal. But the govt has declared they can't charge enough to cover their costs... which the govt did NOT control. Now coal producers apparently have a choice: They can either stop paying their miners, or stop paying their refiners, or stop paying their clerks, or stop paying their transportation, or etc. Either way, no coal gets to the power plants, no matter how much there is.
I especially like the last line here. The govt proposes to punish coal companies who don't meet their contracts, by refusing to allow them to produce MORE. Isn't that sort of like tying someone's hands together, throwing him in a deep lake, and then telling him that if he can't tread water adequately you'll tie both his hands and his feet next time?
Their tax yuan at work.
------------------------------------------
http://finance.yahoo.com/news/Chine...4.html?x=0&sec=topStories&pos=2&asset=&ccode=
Chinese endure power shortages as coal runs short
Chinese enduring power shortages, rationing as power suppliers run short of coal
by Elaine Kurtenbach, AP Business Writer
Monday December 20, 2010, 9:17 am EST
SHANGHAI (AP) -- Communities in central and northern China are facing power cuts and rationing as winter coal supplies fall short of surging demand.
Cold weather and transport disruptions typically cause shortages most years, but the problem has been complicated by coal producers' unhappiness over price controls that are crimping their profits.
China's State Grid, the government power provider, said in reports seen Monday on its websites that recent winter storms had pushed demand higher while worsening traffic bottlenecks, hindering coal deliveries.
Phone calls to the State Grid's branches in central China's Henan, Shanxi, Shaanxi, Chongqing and Hubei provinces -- the areas reportedly worst affected -- rang unanswered Monday.
China depends on coal for more than three-quarters of its electricity and also to fuel centralized winter heating systems in northern cities. Spates of unusually cold weather often strain supplies, with power rationing not uncommon.
About 620,000 households were left without power due to bad weather in Zhejiang, a province west of Shanghai, a report on the State Grid website said. It said power was being restored.
Coal suppliers have also held back on shipments to power companies because contract prices for coal are below market prices, a chronic problem in this state-dominated economy. China has had similar troubles in maintaining supplies of gasoline and diesel fuel, as refiners balked at selling at below-market prices.
"There are troubles with resources but also with the market," Han Xiaoping, an official at energy information provider China Energy Net, said in a report posted on its website. "Costs are rising daily, but coal prices are strictly controlled, so suppliers cannot cover their costs."
China's consumer price inflation hit a 28-month high of 5.1 percent in November, prompting the government to tighten controls on prices for some key commodities.
The National Development and Reform Commission, the country's planning agency, recently ordered coal suppliers to extend contracts set for 2010 into 2011, without raising prices.
It warned companies that fail to fulfill contracts will not be allowed to increase output capacity.
