> Jevons observed that when steam engines get more efficient and individually use less coal

And your basic supply and demand curve indicates that, at least until the supply is diminished in kind which isn't going to happen immediately given the all the constraints at play, using less coal leads to coal becoming cheaper and more readily available.

> This seems like a basic oversight

Not really. Improvements to the steam engine being why we got "cheaper and faster at producing coal" is immaterial. The added detail you've given is an interesting aside, I suppose, but doesn't change anything about the original premise. The only oversight is you not realizing this, perhaps?