Monday, July 6, 2009
"Every year, federal employee George Warholic calculates America's vast coal reserves the same way his predecessors have for decades: He looks up the prior year's coal-reserve estimate, subtracts the year's nationwide production and arrives at a new official tally. ... But the estimate, recent findings show, may be widely overconfident. ... Last year, the US Geological Survey completed an extensive analysis of Wyoming's Gilette coal field, the nation's largest and most productive, and determined that less than 6% of the coal in its biggest fields could be mined profitably, even at prices higher than today's. ... David Rutledge, an electrical-engineering professor at the California Institute of Technology who has studied global coal production, figures the US has about half as much recoverable reserves as the government says, which would work out to about 120 years' worth. ... By adding an economic component, the study broke ground. Jim Luppens, an industry veteran who is now chief of the coal-assessment project for the USGS, says policy makers often confuse the total coal resource--which he describes as the 'blood, guts and feathers' number--with coal reserves, which he likens to the edible meat. 'They mix up the R-words,' he says. ... Based on consumption [in 1907], the USGS concluded there were three trillion tons of coal, enough to last 5,000 years. By the 1950s, armed with more mining data, the USGS and the now-defunct US Bureau of Mines reduced their estimate of the total resource to 500 billion tons", my emphasis, Rebecca Smith at the WSJ, 8 June 2009, link: http://online.wsj.com/article/SB124414770220386457.html.
Amazing, Uncle Sam discovers coal mining has real costs. Therefore coal "reserves" are a function of coal's price and the relevant mining costs.