(Adds China to allow coal-fired power prices to go higher-state
media)
By Chen Aizhu and Sonali Paul
Oct 8 (Reuters) - China ordered miners in Inner Mongolia to
ramp up coal production and oil prices jumped on Friday as a
record surge in the cost of gas revived demand for the most
polluting fossil fuels to keep factories open and homes heated.
The rebound in economic activity from coronavirus
restrictions has exposed alarmingly low supplies of natural gas
leaving traders, industry executives and governments scrambling
as the northern hemisphere heads into winter.
The energy crisis https://www.reuters.com/business/energy/global-energy-shortage-or-coincidence-regional-crises-2021-09-29,
which has led to fuel shortages and blackouts in some
countries, has highlighted the difficulty in cutting the global
economy's dependency on fossil fuels as world leaders seek to
revive efforts to tackle climate change at talks next month in
Glasgow.
In China, where coal production had been curtailed to meet
climate goals, officials have ordered https://www.reuters.com/world/asia-pacific/chinas-top-coal-region-tells-mines-boost-output-immediately-sources-2021-10-08
more than 70 coal mines in Inner Mongolia to ramp up production
by nearly 100 million tonnes or 10%, as the world's largest
exporter battles its worst power shortages in years.
India, the second largest coal consumer after China, is also
suffering electricity outages https://www.reuters.com/world/india/exclusive-indian-states-suffer-power-cuts-coal-stocks-shrink-2021-10-08
because of a lack of coal with over half of its coal-fired
power plants with less than three days worth of fuel stocks,
data from the federal grid operator showed.
Oil prices rose on Friday, on track for gains of nearly 5%
this week, as industries switch fuel.
"A lot of catalysts are out there to keep the oil market
tight," said Edward Moya, a senior market analyst at brokerage
OANDA.
Reflecting the gravity of the situation, the United States
has not ruled out tapping into its strategic petroleum reserves,
which it typically only does after major supply disruptions such
as hurricanes, or pursuing a ban on oil exports to bring down
the cost of crude oil, though there are doubts it is ready to
take such action yet.
"DOE is actively monitoring global energy market supply and
will work with our agency partners to determine if and when
actions are needed," a spokesperson for the Department of Energy
said.
STOKING TENSIONS
Global fuel shortages are another blow to a world economy
just getting back on its feet after the coronavirus pandemic and
threaten an expensive winter for consumers.
China is going to allow coal-fired power prices to fluctuate
by up to 20% from base levels, instead of 10-15% previously, in
order to prevent high energy consumption, state broadcaster CCTV
reported on Friday, citing a meeting of the State Council, or
cabinet.
Bangladesh, meanwhile, bought two cargoes of liquefied
natural gas (LNG) for delivery in October at record prices, two
industry sources said on Friday, as low stocks in Europe boosts
competition with Asia for supplies ahead of winter.
"It is really tough to cope with such abnormal prices. At
the moment, we have no other option but to buy to keep economic
activities going," an official of state-run Petrobangla, which
oversees LNG supplies, said.
Bangladesh is reviewing leases of five oil-fired power
plants which are nearing expiry, despite its plan to move from
oil towards natural gas for power generation.
Even before the current energy crisis erupted, the world was
far behind on efforts to avert catastrophic climate change with
a United Nations analysis estimating that global emissions would
be 16% higher in 2030 than they were in 2010 based on countries'
current pledges.
Surging energy prices are stoking tensions in Europe over
the green transition, with European Union countries fractured in
their views on climate change policies. Wealthier nations want
to keep up the pressure to quit fossil fuels while poorer ones,
worried about the cost to the consumer, are wary.
Britain's energy regulator warned that energy bills are
likely to rise significantly in April.
Hungary's Prime Minister Viktor Orban blamed European Union
action to combat climate change for the current crisis and said
Poland and Hungary would present a united front at the next EU
summit.
Analysts have said rising gas prices are the main driver of
European electricity costs, while the soaring cost of permits on
the EU carbon market has contributed around a fifth of the power
price increase.
(Writing by Elaine Hardcastle; Editing by Carmel Crimmins)
