International steam coal trade

Conference reports~Lettersto the editor was brought about by panic buying by consumers over-reacting to the Iranian revolution. H e offered alternative scenarios for the future: continuing world slump leading to revolutions and wars or economic recovery leading to heavy dependence upon OPEC oil for 10 or 15 years after which OPEC's influence would diminish. Further oil crises might be triggered by renewed buying fever or further political shocks, but they were likely to be less severe because the world was learning to expect and cope with them. He paid tribute to the role of Saudi Arabia, assisted by Kuwait and the U A E , in maintaining some order in the market. This group could alter OPEC's output by 10 million bbl/day without doing Panic buying themselves much harm. He hoped H e traced the link between world Saudi Arabia would continue with this economic growth and the oil price - regulatory role, but her elbow room 6--7% growth presaging the 1973 hike, was limited by her political role in then 3% growth underpinning it up to resisting Islamic fundamentalism and 1979, since when only 1% growth has Russian influence in the Middle East. accompanied something of a price H e thought a steep fall in oil prices was collapse. The second price hike in 1979 no matter for rejoicing. OPEC and the

O E C D countries should get together to agree a floor price of $25/bbl. Economic growth should then restore the price to a level that would be compatible with both continuing growth and the exploitation of energy saving measures and non-OPEC energy sources. The slowdown in discoveries would lead to a slow rise in the real oil price and no overproduction. The end of the century should see about 3 billion tonnes per annam available, using expensive conventional oil but without turning to unconventional sources. The price would be no higher than $40-50/bbl barring further revolution or abandonment of Western energy policies. Discussion was mainly confined to elucidation, but one speaker strongly contested the merit and practicality of an O P E C / O E C D agreement, saying that the market would do a much better j o b on its own.

Letters to the editor

development will not be deterred by Banks' seemingly selective reading, and will make their own judgment on the Gaskin work.

He pointed out that a 40% fall in d e m a n d for O P E C oil could be traced back to a fall of only 5% in total energy demand in O E C D countries. Of the various causes of the fall in OPEC's exports, it was only the expansion of n o n - O P E C oil and the penetration of nuclear energy into electricity systems that constituted significant permanent changes. Recession-induced falls in d e m a n d and consumption out of inventories were clearly reversible; and where there had been substitution of coal for oil this was often attributable to the introduction of dual firing and temporary conversions which could quickly be returned to oil if its effective price were to fall below that of coal.

International steam coal trade May I express my concern at the extraordinarily unbalanced review by Ferdinand Banks of our report Market Aspects o f an Expansion o f the International Steam Coal Trade. 1 The review entirely fails to convey what the report is about: viz the current buying and selling practices of important organizations in the (primarily North Atlantic) coal trade and how new practices might promote the expansion of steam coal trade. With this remit it is scarcely surprising that Professor Gaskin found it necessary to talk with coal trade operators. Professor Banks wondered why we commissioned the report. Let me

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quote from the report's preface:

L. G. Brookes Energy Economics Consultant Boumemouth, UK

A. Baker lEA Coal Research Economic Assessment Service London

• . . We think the report is an illuminating picture of how the coal trade operates,... 1EnergyPolicy, Vol 11, No 1, March 1983, p There are some interesting suggestions on 88. how extra information could benefit buyers and sellers . . . We hope to stimulate comments and suggestions•

Some comments have supported the report's proposals, others have been critical. No previous comment questioned the report's general value as an insight to what is happening in the coal trade, and a further report by Professor Gaskin, on Pacific Rim Trade, has been commissioned and completed. I can only hope that those of your readers who are interested in coal trade

Authors, very properly, hesitate to quarrel with reviews of their work. But I do strongly object to the review - or more precisely, non-review - by Ferdinand Banks of my recent report on the international steam coal trade. ~ H a d Professor Banks attempted a minimal discharge of the reviewer's task, giving the barest indication of the objects and content of the work, and

ENERGY POLICY June 1983