[bratticus]

China Braces for Blackouts
William Pentland / Forbes blog / May 17, 2011

A wave of rolling power blackouts that began earlier this year in coastal areas and several inland provinces of China has crippled businesses in the delta regions of the Yangtze and Pearl rivers. The power shortages are likely to get worse before they get better – to put it mildly.

“The worst has yet to come,” said Xu Shuhui, a general manager of Cixi Henghui Chemical Fiber in Zhejiang province, while speaking yesterday with Shanghai Securities News. “The power company told us to prepare for even more serious electricity cuts when the high energy-consuming summer months come.” ...

... Jiangsu is expecting especially severe shortages as the result of an estimated 16% deficit between supply and demand for electric power this summer. Meanwhile, Shanghai has reportedly begun rationing power supplies for many of the region’s most energy-intensive industries like steelmaking.

[bratticus]

So when does the Chinese peasantry rise up like the Libyans and Egyptians? Will they call it the "Chinese Spring?"

Jasmine Revolution 2

[bratticus]

Heh, Chinese jobs are being outsourced.

Are China's Factories Running Out of Power?
Jeffrey Rubin, Former Chief Economist, CIBC World Market / May 27, 2011

Why has Global Sticks, a manufacturer of wooden ice cream sticks, moved from Dalian, China to Thunder Bay, Ontario?

... When the power goes off, it suddenly doesn't matter if your labor is expensive. Factories don't run on sweat alone.

... It won't be long before all that power rationing starts to curb economic growth, particularly in the power-intensive centers of China's industrial production such as aluminum and steel.

[bratticus]

Me: to Jeffrey Rubin here (I had to split it up because there is an artificial 250 word limit in a HuffPo comment.) Do you think he'll post it and what of it?

``The failure of regulated power prices to keep pace with soaring world coal prices lies at the heart of the China's power crisis...'' -- Jeffrey Rubin

Oh, if only that was the case. While the fact that the producers of power in China must now lose money because they can't charge for power what they are paying for the fuel, it is like saying that a the light switch on a the wall is the source of the electricity that powers the room's lights and demonstrating it by operating only the switch to control the lights. In short it's a fragmented, myopic view of a much bigger issue.

You have to be willfully misleading to say that this is purely an economic problem when outside of China allowing the price of energy to climb is also demonstrated to be economically crippling.

So if free market energy prices are no better for economic growth than artificially low prices how can the heart of this matter be that prices are one way or the other?

The bigger picture that this story is embedded in is that world oil production rates have been flat since 2005 ongoing into 2011. World oil production rates used to steadily move upward decade after decade and now that isn't so. I have read essays by economists that say increasing energy costs are tremendous incentives to bring on the production of more energy but since 2005 what has happened? In 2008 the price of oil was above $140/barrel and the production didn't increase. In April 2011 the OPEC Reference Basket price for crude oil was around $120/barrel and production didn't increase. Instead we see China having waves of rolling power blackouts that began earlier this year in coastal areas and several inland provinces which have crippled businesses in the delta regions of the Yangtze and Pearl rivers. The world is paying more than ever before yet energy supplies are not growing because there are geological and volumetric limits to the rate at which energy can be produced. Take a minute to try and visualize 88 million barrels of oil being drawn from the Earth and send to refineries. That is what happens in the average day and yet we turn a blind eye to what it does to the world and do not question if it can be sustained yet alone increased.

[bratticus]

China's coal production up 11.1% in first four months
May 25, 2011

... The price of thermal coal at Qinghuangdao port, a major port in Hebei province, reached 800 yuan ($123) to 810 yuan a ton, 30 yuan higher than the previous month. According to http://osc.org.cn , a major coal trading information and service website, thermal coal prices in the main harbors around the Bohai Sea have been increasing for 10 weeks, reaching 832 yuan a ton on Wednesday, five yuan higher than last week.

... "The high coal prices have greatly frustrated power generation stations because they might have to spend more money to produce electricity," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

According to the China Electricity Council, the coal-fired power plants of five major power generation groups in China took a loss of 10.57 billion yuan in the first four months this year, 7.29 billion yuan more than the same period in the previous year, and the main cause of the loss is the rapidly rising price of coal.

Many provinces - including Zhejiang, Guangdong, Hunan, Jiangxi and Guizhou - have been suffering from power shortages since March ...

But no explanation or analysis is given as to why the price of coal increased so much.

Some "root of the problem" or "heart of the matter" the artificially low price of electricity is when nobody is explaining the price of coal being so high.

Why don't they just negotiate with the Earth and let Gaia know she will make more money if she yields up more fossil fuels?

[bratticus]

Looks like they are going to embrace inflation and burn coal like crazy instead of have blackouts.

Quite warm weather we are having here now. Good thing burning coal like crazy doesn't have any side-effects.

China energy: supply vs demand
by Simon Rabinovitch / FT Blogs / May 31, 2011

Try as it might to outrun market forces, China’s decision to hike electricity prices from June 1 shows that even the mighty mandarins in Beijing cannot ignore basic laws of supply and demand. They finally flinched late on Monday, announcing a roughly 3 percent increase in power prices for non-residential users in a move to combat looming blackouts by stimulating more electricity production and discouraging consumption.

Oh, of course it discourages consumption. Look at how successful a track record this has had. We used to consume so much fossil fuel and now hardly any, right?

It was a small victory for market forces, enough to warm the hearts of Chinese investors, who pushed up the Shanghai stock index for the first time in nearly two weeks. The Shanghai Composite closed up 1.37 per cent on Tuesday.

Right and inflation has no effect on stock prices too. (I could type obscene words at this point but I won't.)

But the important thing is that we still have yet to see if this will accomplish avoiding power shortages. The loss of hydropower is enormous and they might have only partially mitigated their power shortages.

Plus will there be strikes? Will there be riots? A very large number of people are going to find they can't afford fuel (and probably food too.)

[bratticus]

China hikes electricity rates to counter power shortages
The Associated Press / May 31, 2011

Businesses in the country's prosperous Zhejiang region, west of Shanghai, are so used to power rationing that many have installed diesel generators to use as a backup -- adding to costs and straining supplies of that fuel.

"We can use diesel, while ordinary homes cannot. But we don't like to use it because it's more expensive and costs will be higher," said a human resources manager surnamed Sun at Cixi Sunbay Hats and Accessories Co., in Cixi, southwest of Shanghai.

Translation: expect diesel to go through the roof.

[bratticus]

Blasts strike Chinese government buildings
Three explosions including two car blasts have struck government buildings in eastern China's Jiangxi province, killing two and injuring six, Chinese state media reports.
ABC / May 26, 2011

China sees thousands of protests and other public disturbances each year, often linked to anger over official corruption, government abuses and the illegal seizure of land for development. But bomb attacks are extremely rare.

3 blasts strike China gov't buildings, 2 killed: report
The China Post / May 27, 2011

A disgruntled farmer upset over a legal case was allegedly behind a series of explosions that struck government buildings in eastern China Thursday, killing two people and injuring six, state media said.

... The unusually brazen and premeditated incident is likely to add to official fears over possible public unrest stemming from a range of social grievances, with soaring inflation topping the list.

... More than 40 people were injured earlier this month when a disgruntled former employee set off a petrol bomb at a bank in a Tibetan-inhabited region of northwest China, according to authorities.

... The attacks were carried out by disgruntled loners or mentally unstable people and prompted national hand-wringing over China's focus on economic growth at the expense of addressing mental problems linked to head-spinning social change.

Oh but of course! Starvation couldn't be the cause, it's just mental illness.

[TheDude]

Jasmine Revolution going ker-flopft suggests that the impression that the majority of Chinese support the government is warranted, for better or worse.

Nice roundup of global coal outlook: Here's Why a Pop for Big Thermal Coal Producers Is Due - Seeking Alpha.

As a general trend coal imports in China are trending up. In 2008 China produced 79% of its electricity from coal. That percentage probably hasn’t changed much since then. In 2009, China imported 102M tonnes of steam or thermal coal. In 2010, that figure was 147M short tons (a short ton is 90.72% of a tonne, so that‘s 133.36 tonnes). That’s a 31% increase in just a year. Some might point to a the worldwide recession to account for this difference, but let’s remember that China did not experience a recession. Its GDP kept growing at a high rate without a glitch. Its businesses kept producing at a quickly growing rate. This 31% increase in imports by China is not a rebound from a recession.

Throw in Japan making up for losses, India chugging ahead as well, and Indonesia cutting imports of high sulfur, and you have a bit of a storm brewing. China did suffer through blackouts in 2004 so they have some experience in this kind of taking it on the chin.

Pakistan of course is the poster child for a nation just going whole hog Olduvai. Then you have Iran almost a year into fuel shortages, lines at the pump. Should check out how those two are holding up GDP wise.

FT.com / Asia-Pacific - Power cuts darken mood in Pakistan

In Chakwal, a city in northern Punjab 90km from Islamabad, protesters set up road blocks and ransacked local offices at the weekend. In Multan, the local Multan Electricity Supply Company was attacked. In Karachi, Pakistan’s largest city, riots have raged all month after the sacking of 4,000 employees of the Karachi Electric Company.

“The power cuts are terrible. I have a generator so I’m OK. But poorer people don’t. I don’t know what this country will look like in a few years’ time,” said Mohammed, one Islamabad resident. “The money is flying out of here [abroad].”

A lack of investment in the power sector during General Pervez Musharraf’s rule is widely considered to have been ruinous. The US, and other donors, identify rehabilitating the power sector as a top priority for the country’s stability and development.

Its peak power demand is 22,000MW. Maximum capacity is well short of that at just 17,500MW.

The power shortages have becomea lightning rod of popular discontent with economic management under a Pakistan People’s party-led government. They are also a potent symbol of Pakistan’s sharp economic decline. As well as the power sector, sapping financial losses are being sustained in lax tax administration and public sector companies.

'sharp economic decline' is highlighted.

[TheDude]

To answer my own query, Iran has supposedly converted enough petrochemical plants to refine enough gasoline for domestic needs - practically overnight. Also an expansion to a century old refinery, which was rushed leading to an explosion last week...Iran's gasoline production and consumption balanced | Energy News | Trend.

[bratticus]

Revolution?

China raises prices for farmers:

China’s Power-Price Increase May Ease Outages, Drive Inflation
Bloomberg / May 31, 2011

China raised electricity prices for businesses and farmers ...

Farmers blows up China's government buildings:

Blasts strike Chinese government buildings
Three explosions including two car blasts have struck government buildings in eastern China's Jiangxi province, killing two and injuring six, Chinese state media reports.
ABC / May 26, 2011

China sees thousands of protests and other public disturbances each year, often linked to anger over official corruption, government abuses and the illegal seizure of land for development. But bomb attacks are extremely rare.

3 blasts strike China gov't buildings, 2 killed: report
The China Post / May 27, 2011

A disgruntled farmer upset over a legal case was allegedly behind a series of explosions that struck government buildings in eastern China Thursday, killing two people and injuring six, state media said.

It doesn't take an organised revolution. It just takes multitudes of people discovering they can't afford enough to eat.

[bratticus]

China drought fuels food price increases
CHINA DAILY / May 31, 2011

'I didn't buy many leaf vegetables in the last week because the price is getting crazy,' said Zhang Weirong, a 67-year-old Shanghai resident. 'Cabbage used to be as cheap as paper, and for 5 yuan (95 cents) you would get too many cabbages to carry home,' she said.

UN warns of food riots
By Tom Bawden / The Guardian / May 30, 2011
FOOD prices are expected to hit new highs in the coming weeks ...

... The UN warning came after the release of data showing that the amount of speculative money that has been pouring into basic foodstuffs — and other commodities — also hit a new record in April, putting additional upward pressure on prices that are already being forced higher by the prospect of further crop failures.

... “We are very worried about high prices,” Green said. “Food riots are definitely a possibility. If you’re struggling to feed your kids and the price of bread suddenly doubles, it could prove the tinder that sparks the whole thing off.”

[bratticus]

Commodities Head for Biggest Monthly Decline in a Year on China
Bloomberg / May 31, 2011

The Chinese central bank has raised reserve requirements at banks eight times since November and increased interest rates four times since October. Electricity prices for businesses and farmers in 15 provinces will be higher from tomorrow, the first increase in more than a year, threatening to worsen inflation as the nation aims to curb power shortages that may be the worst on record.

[bratticus]

Beijing Cautiously Raises Power Prices
By JAMES T. AREDDY / WSJ / MAY 31, 2011

... The increase in power tariffs doesn't apply to households, but may presage such a rise later.

... it isn't being applied to China's biggest industrial areas and provinces: Guangdong, Zhejiang, Jiangsu, Shanghai, and the capital, Beijing.

Instead, the price rise applies to much of China's middle including cities like Chongqing and Wuhan that, while booming, don't make up as large a share of the economy as export zones on the coast.

The price will be increased between 4 yuan, about 61 U.S. cents, and 24 yuan per 1,000 kilowatt hours, depending on the location, the NDRC said in its statement. The highest is in coal-rich Shanxi province and the lowest in southwestern Sichuan.

Industrial users in the affected provinces will be charged an average 76 U.S. cents per kilowatt hour, a 2.8% rise, according to Citigroup analyst Minggao Shen. Mr. Shen says power prices aren't keeping up with coal price rises—he puts the year-on-year gains around 9.8%—which would have required the electricity price to rise to 86 cents to reflect the full coal-price increase.

[bratticus]

China hikes power prices as shortages loom
Reuters / May 30, 2011

China looks set for the worst summer power shortages since at least 2004 as demand growth remains strong while coal-fired power plants, which generate 80 percent of national electricity output, have restricted production due to operating losses resulting from high coal costs.

... China's five state-owned power generating groups lost more than 10 billion yuan ($1.5 billion) on their thermal power operations in the first four months of the year, an official with the council said on Tuesday.

[bratticus]

Electricity Shortage Looms in China
by Tony D’Altorio / Investment U Research / June 1, 2011

Largely unnoticed, China usurped the United States as the world’s largest electricity user last year.

It happened when China’s 700 million rural residents bought up personal computers, air conditioners and other electric appliances in a mere two-year space of time. And that happened because of government plans to improve living standards in such areas.

But that aid had an unforeseen affect: China now faces a huge electricity shortage.

Many provinces have resorted to rationing electricity in what looks to be a long, hot summer. In fact, they had to start limiting individual supply earlier than expected in Shanghai, Hunan, Jiangsu, Anhui, Zhejiang and Chongqing.

And Xue Jing of the China Electricity Council admits that the nation could fall short by 30 million kilowatt hours this summer. She says the country might “face its most severe electricity shortage since 2004.”

If that happens, it would only represent three percent of China’s generating capacity. But it would also be concentrated in key manufacturing regions. ...

... Unfortunately for the rest of the world, China’s problems concern more than just China. If its economy slows, commodity producers everywhere and the larger global economy will suffer as well.

An electricity shortage will force regional manufacturers and businesses to generate power to meet their needs other ways. That largely means running diesel fuel generators.

China has already banned diesel exports in anticipation, but it doesn’t have enough to meet a crisis even then. Should the shortage be bad enough, it will have to buy the commodity in the global market. ...

[bratticus]

Huaneng Power’s On-Grid Tariffs Rise to Curb Energy Shortage
Winnie Zhu and Allen Wan / Bloomberg / June 1, 2011

Huaneng Power International Inc. (600011), the listed unit of China’s largest power producer, said on-grid tariffs at its power plants have been increased as the government aims to boost production and curb an energy shortage.

Tariffs for the company’s generation units, or paid by grids, will rise 9.3 yuan ($1.4) per megawatt-hour this year, according to a statement to the Hong Kong Stock Exchange.

China increased retail power prices in 15 provinces from today to curb demand and spur electricity generation as the nation battles with a supply shortfall. China also boosted on- grid power tariffs in the provinces of Hubei, Anhui and Jiangxi from today while those for 12 other provinces were increased on April 10, China Securities Journal said May 30.

Energy imports to increase
People's Daily Online / June 1, 2011

China will tackle an impending power shortfall by increasing energy imports, said the National Development and Reform Commission (NDRC), the top economic planner, on Wednesday.

The nation is expected to see a serious shortage this summer, said Li Yang, director-general of the NDRC's Bureau of Economic Operations Adjustment.

"With the coming of summer, the peak time for energy consumption, and the rapid growth of industrial production, the gap between electricity demand and supply will become more obvious and some areas may face a shortfall in coal and oil supplies," the bureau said in a statement.

Some experts say the nation will experience an energy shortfall of more than 30 million kilowatts this year.

China's net coal imports declined by 13.56 million tons, or 27.2 percent year-on-year in the first four months of 2011. Rising international coal prices, about 100 yuan ($15.4) more for each ton than domestic prices, are the major cause of the decline, according to the bureau.

The use of natural gas for power generation has also been increased to address the problem of tight supply. Gas-fired power plants in six provinces, including Henan and Jiangsu, tripled the supply of electricity they generated using natural gas.

"Imports of natural gas increased relatively rapidly," Li said, without providing details.

... Some provinces have implemented power rationing since April to ensure residential supplies, and the amount of electricity supplied to plants with high energy requirements has been reduced in a number of areas.

On Wednesday, the government raised power prices for industry, commerce and agriculture in 15 regions by an average 0.0167 yuan for each kilowatt-hour, the first retail power price rise since 2009.

China urges more coal imports to keep lights on
Reported by Jim Bai, Judy Hua and Tom Miles in BEIJING, Fayen Wong in SHANGHAI; Editing by Jacqueline Wong / Reuters / June 1, 2011

China will encourage coal imports and urge miners to boost output to increase supplies to power plants, China's economic planning agency said on Wednesday, as the world's largest energy consumer tackles its worst power shortages in seven years.

Despite its massive electricity generating capacity, China is facing power shortages because power producers are forced to accept a low fixed price for the electricity they supply to the grid, economists say. With high coal costs, many power firms prefer to cut output rather than incur losses.

The National Development and Reform Commission (NDRC) said on Wednesday that China would take comprehensive measures to increase energy supplies and curb unreasonable demand.

Eleven out of China's 31 provinces and regions have introduced power use restrictions since May, the commission said in a report on its website (http://www.ndrc.gov.cn).

... China's apparent oil demand rose 9.2 percent in April from a year earlier to almost 9.36 million barrels per day in April, second only to a record high of 9.65 million bpd in December, as refineries stepped up output to ensure domestic supplies, shrugging off soaring oil prices.