Feb 7, 2023·edited Feb 7, 2023Liked by Arjun Murti
Hi Arjun, Superspiked community:
There's a lot of interest in coal out there, it would be very interesting to see Arjun's analysis of what's happening in the coal market. Some thoughts for discussion:
- Thermal coal and natural gas prices are linked through the potential for countries to switch from thermal coal to natural gas power generation, we've seen this in the recent effect the price spike in natural gas had on coal consumption (not perfectly linked, but they certainly affect one another). So if we agree with Superspiked's basic premise, that we're in for a period of extremely volatile oil and natural gas prices, this should keep having knock-on effects on thermal coal prices (and even met coal prices, if thermal goes high enough e.g. 2022). So coal should behave in the same sort of supply-constrained, strong-demand, spikey way that natural gas and oil are during this superspike period.
- This spikey behaviour should contribute to pulses of inflation pressure over the next decade, it's hard to see how this goes any other way.
- Met coal demand:supply seems imbalanced, even by the IEA's estimation. All the same ESG pressures, permitting delays, image problems, confused public narratives and poor historical returns that have created the current oil and natural gas situation apply to met coal, only moreso. So it would be interesting to see further analysis on coal, the less-discussed cousin of oil and natural gas.
- Another thing that I've often wondered about, putting the question out there to the group: what do countries outside the OECD think about climate change and the energy transition? What's the view outside the Western culture and media bubble? I get the impression from people like Anas Alhajji that many people in countries outside the OECD view the West's obsession with the climate change topic and increasingly apocalyptic rhetoric skeptically, like the West has collectively hyped ourselves up and gone mad. What do you think?
Great article again. Coal mines are the new tobacco stocks. The Aussie miners are cash cows and will be for a long time based on the current strip pricing. Give us a shout when you come down under and we can do a coal mine golf tour.
Great content again Arjun - will you spend some time talking about Saudi Arabia's role as a global energy supplier please? In this messy energy transition era, and Saudi being the lowest cost and lowest emission oil producer and 2nd biggest oil exporter. And, will they develop gas/LNG?
Pure gold: Energy availability, affordability, reliability, and geopolitical security are far and away the most important characteristics of any fuel choice. Full stop. Environmental and climate considerations are only taken into account after primary needs are satisfied. Many of you will agree, though some will disagree. As an analyst, this is objectively not a close call.
Intelligent energy policy should take account of not only the effect CO2 and CH4 on climate, but also the value of a reliable grid and society’s ability to adapt to a changing climate. The complexity of these factors encourages politicians to make simple rules (“no coal!”). And while it is true that CH4 is a more powerful greenhouse gas from its ability to block certain frequencies of infrared light, it is a far less prevalent GHG than CO2 (~80 ppm vs 400+ ppm).
Hi Arjun, Superspiked community:
There's a lot of interest in coal out there, it would be very interesting to see Arjun's analysis of what's happening in the coal market. Some thoughts for discussion:
- Thermal coal and natural gas prices are linked through the potential for countries to switch from thermal coal to natural gas power generation, we've seen this in the recent effect the price spike in natural gas had on coal consumption (not perfectly linked, but they certainly affect one another). So if we agree with Superspiked's basic premise, that we're in for a period of extremely volatile oil and natural gas prices, this should keep having knock-on effects on thermal coal prices (and even met coal prices, if thermal goes high enough e.g. 2022). So coal should behave in the same sort of supply-constrained, strong-demand, spikey way that natural gas and oil are during this superspike period.
- This spikey behaviour should contribute to pulses of inflation pressure over the next decade, it's hard to see how this goes any other way.
- Met coal demand:supply seems imbalanced, even by the IEA's estimation. All the same ESG pressures, permitting delays, image problems, confused public narratives and poor historical returns that have created the current oil and natural gas situation apply to met coal, only moreso. So it would be interesting to see further analysis on coal, the less-discussed cousin of oil and natural gas.
- Another thing that I've often wondered about, putting the question out there to the group: what do countries outside the OECD think about climate change and the energy transition? What's the view outside the Western culture and media bubble? I get the impression from people like Anas Alhajji that many people in countries outside the OECD view the West's obsession with the climate change topic and increasingly apocalyptic rhetoric skeptically, like the West has collectively hyped ourselves up and gone mad. What do you think?
Great article again. Coal mines are the new tobacco stocks. The Aussie miners are cash cows and will be for a long time based on the current strip pricing. Give us a shout when you come down under and we can do a coal mine golf tour.
Great content again Arjun - will you spend some time talking about Saudi Arabia's role as a global energy supplier please? In this messy energy transition era, and Saudi being the lowest cost and lowest emission oil producer and 2nd biggest oil exporter. And, will they develop gas/LNG?
Pure gold: Energy availability, affordability, reliability, and geopolitical security are far and away the most important characteristics of any fuel choice. Full stop. Environmental and climate considerations are only taken into account after primary needs are satisfied. Many of you will agree, though some will disagree. As an analyst, this is objectively not a close call.
Goddamn outstanding article...sanity! Really appreciate you putting your Wall Street retirement to good use.
... and CH4 has an atmospheric residence time of about 9 years, compared to 100+ years for CO2
Intelligent energy policy should take account of not only the effect CO2 and CH4 on climate, but also the value of a reliable grid and society’s ability to adapt to a changing climate. The complexity of these factors encourages politicians to make simple rules (“no coal!”). And while it is true that CH4 is a more powerful greenhouse gas from its ability to block certain frequencies of infrared light, it is a far less prevalent GHG than CO2 (~80 ppm vs 400+ ppm).