King Coal will return to his throne

Coal prices have doubled in the last year, and according to many analysts they’ll double again by 2005 - read more at Moneyweek.co.uk - the best of the week's international financial media.

Nuclear power, windpower, wave power and even waste power. They've all been touted as the fuel of the future over the past few years. But so far, none of them have been able to come close to being the answer to the world's energy problems. Instead, our attention has once again been grabbed by a rather more unglamorous source of energy. Yes, King Coal' is back: coal prices have doubled in the last year, and according to many analysts they'll double again by 2005.

Ask pretty much any question these days and the answer will be China. And so it is with the wild increases in the coal price. Only a few short years ago, China emerged onto the scene as a net exporter and pushed prices down. But today its own rapacious consumption has tipped the balance and the emerging giant is on the way to being a net importer. China's effect on coal prices has indeed been rather dramatic, say Franesco Guerrera, Carola Hoyos and Victor Mallet in the FT. But as it starts to import coal itself, that effect will be magnified. Most coal stays in the country it is mined in: the quantity of the world's coal that is internationally traded is "relatively small". Any change in that status quo will have a "predictable" effect on prices. But it isn't just China that is coming back to coal, says Dan Roberts, also in the FT. In the US, it already fires more than half of all power stations and a "sympathetic" US government predicts that coal's contribution to global energy consumption will double to 50% by 2015 as developing countries not just China, but the likes of India too also seek a supply of low-cost energy.

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