wAbstract
@Since China decontrolled coal prices, its coal price has risen
steadily and been unusually volatile. In 2011 in particular, high
coal prices and capped electricity prices in China discouraged
coal-fired power generation, triggering widespread power shortages.
We suggest that these coal-price disturbances could be symptomatic
of a major change in pricing dynamics of global fossil-fuel markets,
with increasing correspondence between coal and oil prices globally.
Historically, global coal prices have been more stable and lower
than oil and natural gas prices on a per-heat basis. In recent
years, however, coal prices have been increasingly volatile worldwide
and have tracked other fossil fuel prices more closely. Meanwhile,
the recent development of unconventional gas has substantially
decoupled US natural gas and oil prices. Technically, low US natural
gas prices, with potential fuel switching, could drive US domestic
coal prices lower. However, this effect is unlikely to counteract
the overall trend in increasing coal consumption globally. China's
market size and unique, partially-controlled energy system make
its reform agenda a key force in the global economy. Policymakers
in the US, E.U. and elsewhere should monitor China's economic
reform agenda to anticipate and respond to changes accompanying
China's increasing importance in the global energy economy.
Keywords: Coal; China; Electricityx
1. Introduction
2. The Chinese context of coal price reform
3. Coal price disturbances
4. Possible explanations for a stronger link between coal and
oil prices
5. Implications and future prospects
6. Conclusion
Acknowledgements
Appendix A. Supporting information
References