(MENAFN - Arab News) As part of the changes taking place in the energy market, industry observers are wondering whether the expected growth in the coal consumption will be high enough to compete with crude oil in the energy mix, if current policies and patterns of consumption continue.
According to a recent report from the Paris-based International Energy Agency (IEA) covering the five-year period between 2012 and 2017, global coal consumption is expected to increase to 4.32 billion tons of oil equivalent (BTOE) by 2017. At the same time, projection for crude oil stands at 4.40 BTOE during the same period.
Coal consumption is expected to increase in every region of the world except the US. American consumption is slated to drop by 14 percent during 2011-17. And that comes mainly as a result of a surge in domestic natural supplies and consumption at the expense of coal. Natural gas supplies jumped by 127 billion cubic meters between 2006-2011 due to US gains over the past several years in hydraulic fracturing technologies.
The Asian market will continue to be the main consumption region, led by both India and China.
This region has accounted for more than half of global demand during the past two years. India is expected to surpass China, who overtook Japan before that.
Australia will continue to be the world's top supplier followed by Indonesia and others. Global seaborne coal trade surpassed one billion tons last year for the first time ever and is expected to grow in the coming years.
One area of concern is the environmental impact of the coal being the dirtiest of all energy sources.
This surge in coal consumption reversed the downtrend of coal prices that peaked in 2008 at more than 200 a ton, saw prices declining to a two-year low of 85 a ton.
But prices have now started to climb up again as the demand improves.
One of the major significant aspects of this development is that the US is withdrawing gradually from world markets at least as far as energy is concerned. Domestic oil production is increasing. Its natural gas supplies are also up while its coal consumption shows a decline. On the other hand, the emphasis is in terms of consumption and demand growth is shifting to Asia, where demography dictates new realities in terms economic and political relationship.
For the past few years, Asia has emerged as the new market attracting supplies. But the new development is that the US is becoming less and less connected with the world energy market.
The growing domestic production in oil and gas in both the US and Canada provides the chance for the top world consumer to move closer to the long cherished goal of reducing its dependence on foreign supplies from the Middle East.
Though we are in the age of globalization, it is hard to speak about self-sufficiency in any commodity for any country and in particular as far as oil is concerned.
This is because of the international nature of the market as prices are longer set according to conditions that are confined only to what happens within national borders.
This new development has its impact on two main areas - the domestic scene within energy suppliers mainly in the Gulf region if we are speaking about crude oil in particular, because of growing energy consumption. However, this will make an additional emphasis on the need for Gulf states to diversify their economies as they will consume more of their hydrocarbon resources internally to meet domestic needs.
The other area is the availability of specific and concrete information on various trends in different markets. This can be seen as the ability to manage the energy industry in its various forms be it crude oil, natural gas or coal is the availability of information, hopefully real time, on what is going on in each field.
When the Western countries, led by the US, were prime consumption markets and given the tradition of these countries to access to disseminate information, different players were relatively in a better position to make sound decisions and forecasts, based on available data.
Factors such as economic growth, weather and even consumer behavior could easily be taken into consideration to make forecasts and formulate policies and decisions.
With the main consumption market moving to Asia, and in particular China, that has no apparent tradition for a steady of flow of data, the market and its main players are mostly kept in the dark.
A good example was when crude oil prices continued to rise a few years ago conventional markets in the West were in fact was experiencing a declining demand.