The whole point of this blog is to alert people to the beginning of a fundamental change in the global economy associated with China's rise, and so you would think that, of all people, the China Coal Watcher wouldn't be at all shocked by the phenomenal growth rates in the daily headlines.  But somehow one is simultaneously taken aback by the sheer magnitude of the numbers even though it's exactly as predicted.  Being stunned without being surprised is a rare and strange emotion, but perhaps this is a rare and strange time.

From Bloomberg:

Coal prices in China, the world's largest producer and consumer of the fuel, are likely to rise as authorities strengthen regulations to improve environmental and safety standards at mines, a government official said.

``China's low coal prices are the result of a neglect of environmental and safety issues in the past,'' Hou Shiguo, a deputy director in charge of industry policies at the National Development and Reform Commission

... Prices of coal rose to a record last month at Qinhuangdao, China's largest port for the fuel, because of increased use of air-conditioners. China burns coal for 78 percent of its power.

``The increase in prices is a long-term trend as the government moves toward a more market-based mechanism to price coal,'' said Hou, who works for China's top economic planning agency. Higher crude oil prices are driving up operating costs and contributing to making coal more expensive, he said.

Diesel fuel is vitally important to the heavy equipment used to mine and transport coal and constitutes a large fraction of the delivered price.  Large amounts of energy are also used to synthesize the explosives also used in some mining operations.

Crude oil hit an all time nominal dollar high this week, at more that $84/barrel (passing the psychologically "significant" $2/gallon mark.  Of course, the nominal part means that it still doesn't feel as expensive as the all time high in December of 1979 - where it was equivalent to $100/barrel.  Still, that's only a 19% increase away and oil prices are four times what they were only 8 years ago.

The dollar part means, especially given the global currency readjustment that is presently taking place, that countries that peg their currency to the dollar, like China, feel the pinch more than others.  If you're British, European, Canadian, or a citizen of the other nations that have seen rapid growth in the value of their currency vs. the US dollar in the past few years, you won't notice as dramatic an increase as the Americans or Chinese.  If anything puts pressure on the Chinese to float their currency, oil prices will have more inflence than the all the governments and international organizations of the world put together.

... Japanese utilities may have to pay 22 percent more for Australian coal next year after South  Korean buyers locked in supplies seven months early, anticipating a shortage, Goldman Sachs JBWere Pty. said in Sept. 13 report.

Prices of thermal coal may jump to $68 a metric ton, increasing an earlier forecast by 10 percent.

China's coal producers increased output by 10 percent in the first half to 1.26 billion metric tons, while demand gained 12 percent to 1.263 billion tons, the commission said Aug. 27.

That's about 7 million tons a day (80 tons per second), double what it was only seven years ago and still growing fast! It's now over 40% of total global coal consumption, which means those double digit growth rates are starting to influence the entire world's growth rate in coal consumption.  China is on track to consume more coal than the rest of the world combined by 2010.  So much for hope of effectiveness on carbon emissions.

At the regional market rate (admitedly not yet the rate paid by many coal customers in China), China is on track to go through $170 Billion of the stuff in 2007, or about 6% of their entire GDP.  That may not sound like a large fraction but it's actually enormous considering how dependent the Chinese economy is on coal. The inflation-boosting ripple effect of an increase in coal demand and prices will have a significant impact on the entire global economy in the next few years.