United States coal reserves are taking a beating in a new examination by the USGS of recoverable reserves of Gilette in Wyoming, the largest field in the US with 37% of total coal production in 2006. Its present reserves have been downgraded by half thanks to an improved methodology which incorporates a new dataset with ten times as many datapoints as used in the previous assessment. Of 182 billion metric tonnes of resource in place, 9.16 billion (6% of original resource total) were found to be recoverable under "current technological and economic circumstances". This compares to an earlier assessment from 2002 by the USGS in which 20.87 billion metric tons were estimated to be recoverable.

The one catch is that the term "present economic circumstances" depends very much on the price of coal. If the price of coal increases significantly, the newly estimated reserve level of 9.16 billion metric tons can be expected to increase, perhaps several-fold. Although the USGS takes a shot at determining the price-sensitivity of reserves by discussing its effect, there still are a lot of open ends. Nonetheless the economic aspect of coal recoverability should be taken seriously; hence the question mark in the title.

The new USGS assessment does show that the statement made by the US National Academy of Science two years ago, that US coal reserves are likely overstated, should be taken seriously. The National Academy of Science concluded at that time that coal recoverability estimates are based on outdated assessment methods--these methods have not been reviewed or revised since 1974 and primarily reflect input data from the early 1970s.

More information on the USGS study, including estimates by the US of the effect of changing economic conditions on coal availability in Gillette, can be found below the fold. The study itself is available through this weblink (Beware! 92 megabyte, 123 pages)

One of my most enduring memories of Washington D.C. occurred while attending a meeting on Geothermal Energy Development, back in the days before the Iron Curtain fell. In the evening after dinner, I took a colleague from Eastern Europe, on his first American visit, for a walk down the Mall. We walked, almost alone, on a still, bitterly cold, dark evening with fresh snow on the ground, and stars peppering the sky above us to see the sights, including the Lincoln Memorial. We stood staring, like backwoods tourists, through the windows of the Air and Space Museum.

We came back to the hotel for alcoholic refueling, thinking that the energy problems of the time would guarantee unending research funding into new forms of energy, and that our future was assured. That was about thirty years ago, and we were, of course, wrong, at least in terms of the funding and sustained interest in unconventional energy sources. Now we are walking back over some of the same ground. Again, fluctuations in oil prices have removed the immediate perception of the need for alternate supply, and have also weakened the credibility of those of us who try to suggest how to deal with the problem.

Prophecy, particularly when it deals with the near term future runs the risk of being corrected by the actual turnout of events. The ups and downs of energy demand, and available supply–-particularly when tied to the economic fortunes of nations, can make logical projection under one condition, but become apparently hopelessly in error when that condition doesn’t happen. Thus, at the moment, with the declining price, and apparent glut of oil, the public no longer feels that there is a crisis; the credibility of those forecasting a crisis is damaged, and can only be reconstructed over a longer period of time and changing circumstance.

Author's note: I have added a comment to the bottom of the post.

I recently looked through news articles to see which energy sectors were being affected by the credit crisis. I was amazed at how widespread and how devastating the impact is.

There are really two closely related problems. One is reduced access to credit, making new borrowing difficult for nearly every business that requires debt. Prices for all commodities have been dropping as well. At least part of the reason for this price decline is the lack of availability of credit—many of the less credit-worth buyers drop out of the market. This leaves fewer buyers and almost the same number of sellers, so the price drops.

To steal a phrase “It is the best of times, it is the worst of times,” although the rest of the opening to A Tale of Two Cities (“It was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair,”) may also be appropriate. It is also interesting, and will become more so as the new Administration seeks to find a way forward out of the compounding problems that now face it. The WSJ has noted the statements by President-elect Obama earlier:

On the campaign trail, Mr. Obama argued that spending $150 billion over the next decade to boost energy efficiency would help create five million jobs. The jobs would include insulation installers, to make houses more energy-efficient, wind-turbine builders, to displace coal-fired electricity, and construction workers, to build greener buildings and upgrade the electrical grid.

It goes on to note that if renewable energy is only brought on-line to displace conventional coal power, then the net job losses from existing industries may well offset the gains in wind power. That topic brought a discussion in comments a couple of days ago. It is, however, perhaps worth pursuing in a little more detail.