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Energy production's momentum growing China's energy production continued its rapid development momentum during the first nine months of this year. The total amount of energy production was equivalent to 1.14 billion tons of standard coal during the period, an increase of 13.5 per cent from a year ago. Energy demand, driven by the country's fast economic development, also grew at a fast pace. Figures from the National Federation of Electricity Enterprises indicate that electricity consumption grew a year-on-year 14.9 per cent during the nine months. Electricity consumption by the industrial sector rose a year-on-year 16.4 per cent during the period. The gap between demand and supply became prominent in July and August, because of the need to run air-conditioners in summer. However, electricity shortages eased month by month. Along with the end of the high temperatures, the power shortage eased obviously in September. Driven by the strong demand from electricity, metallurgy, building materials and chemicals, coal consumption boomed during the first nine months. The electricity industry alone consumed 644.3 million tons of coal, an increase of 15.6 per cent. Due to the strong demand, the coal stock was at a low level at the end of September compared with the same period a year ago. Since the second quarter, the relatively tight finished oil supply has effectively eased. The supply of crude oil and finished oil basically met demand. Crude oil consumption was 216.3 million tons during the first nine months, an increase of 15.11 per cent. Gasoline and diesel consumption grew a year-on-year 20.12 per cent and 24.68 per cent respectively during the same period. Due to the booming demand, energy prices rose continuously in 2004. Figures from the People's Bank of China indicate that by September, the prices for coal, oil and electricity had kept growing for 27 consecutive months on a year-on-year basis. The ex-factory price index for electricity, coal and oil was on an upward trend during the first nine months, according to the National Bureau of Statistics. Since April this year, international oil prices rose rapidly. As a result, domestic oil prices also increased. The ex-factory prices for oil in September rose 31.8 per cent compared with the same month a year ago. The National Development and Reform Commission raised the prices for finished oil products three times. Prices for gasoline and diesel were at a high level. Strong demand for coal also fuelled ex-factory prices, which rose a year-on-year 20.4 per cent in September. Along with the country's macro-control measures achieving results, the growth in the country's industrial production began to decline from May. (China Daily) It is predicted that growth in the country's gross domestic product, fixed asset investment and industrial production in the fourth quarter will decline compared with the third quarter. Energy demand will also fall. On the other hand, the supply of electricity and coal will increase because of the fast fixed asset investment in those sectors since 2004. New installed capacity of power generators reached 24.7 million kilowatt during the first nine months. The new capacity is expected to increase 40 million kilowatt this year. The country is likely to generate 2.1 trillion kilowatt hours of electricity this year, an increase of 13.5 per cent from last year. The power shortage in the fourth quarter will ease. But power supply in provinces such as Jiangsu and Zhejiang will continue to be tight this winter. At the end of last year, China's coal production stood at 1.67 billion tons, ranking first in the world. Fuelled by strong demand and rising prices, coal production continued to grew rapidly this year. Coal production grew 15.4 per cent by the end of July. The rate rose to 18.7 per cent by the end of August and 19.8 per cent by the end of September. On the other hand, investment in the coal industry rose 63.1 per cent during the first nine months compared with the same period a year ago. Coal production is expected to reach 1.9 billion tons this year, an increase of 15.5 per cent from last year. Despite the increasing production, peak winter time for consumption, small stockpiles and insufficient transportation capacity will keep prices at higher levels. Unstable factors such as the above and coal mine safety will also have an impact on coal supply. According to a report by the International Energy Agency, oil demand will rise 3.2 per cent this year compared with last year, the fastest growth in recent years. However, the world oil supply capacity still surpasses demand. Experts from home and abroad agreed this situation would continue in the next five to 15 years. But higher oil prices on the international market will have an impact on the domestic market. The National Development and Planning Commission is likely to further raise the prices for finished oil products in the fourth quarter. Since the beginning of this year, international oil prices have been rising continuously. They rose to as high as US$55 and higher per barrel recently. Past experiences suggest higher oil prices will lead to a global economic recession. The impact of high international oil prices on the domestic economy has already been felt. The strain of transportation capacity also brings instability to energy supply. Meanwhile, the serious waste of resources during coal mining also has an impact on the sustainable supply of energy. The government should improve the oil price formation mechanism to ensure a stable supply of gasoline and diesel. It should also reform the method to collect resources compensation to improve efficiency. A long-term effective mechanism beneficial for healthy development of the
electricity industry should also be established. |
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