China increases fuel prices by 10% due to supply shortages

3rensho · Tar Sands Joined: Apr 04, 2005 Posts: 86

Taken from the BBC

Here is an excerpt form the above link.

Eli

I am glad someone started a thread on this on Current News.

China is in the midst of the worst diesel shortage they have ever seen. The number two fuel consuming country behind the US running out of gas is kind of a big deal.

pup55 · Expert Joined: May 26, 2004 Posts: 3809

I agree. This item deserves a separate thread. This story has the potential to blow up into an even more giant mess this winter if:

a. The government decides to try to increase imports to get more fuel to the people.

b. The government decides not to try to increase imports and the shortage spreads and starts causing even more rioting.

Eli

That is what I was thinking PUP

China is running out of fuel and they are trying to act like it is just the Chinese oil companies holding out for more cash.

There is a real story here and I bet it is not what we are getting right now.

A significant is that it is effecting major business centers that were spared in earlier shortages. If they had the fuel it would have at least been delivered to Communist Party strongholds.

I am just left wondering how is the new Chinese middle class going to be able to drive SUVs without fuel?

Zardoz

You're darned right this is a big deal. Very big.

I was wondering about this. With demand for fuel in China going up at a crazy rate for some time, it seemed inevitable that some sort of crunch would have to occur eventually.

Sure enough, here it is already, earlier than anybody expected, I'm sure. Once again, the "fast-forward button" phenomenon kicks in and shocks everybody. It's getting to be a routine event.

Things are "proceeding apace", aren't they?
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Eli

Yes it certainly is happening fast.

frankthetank

First time i've heard mention of this. So there has been rationing going on in China?

I was watching a PBS special on the honey bee (its decline) and they were in China during one part showing how these Chinese farmers HAND POLLINATE their pear crops! (because all the bees are dead from pesticides). I think they better park the SUV's and head back to the countryside, the hand pollinators need more hands!
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nocar · Intermediate Crude Joined: Nov 05, 2004 Posts: 685

Just from looking at the economic development in China from a peak oil perspective, I have felt that there is a mean trick being played on the Chinese car-buyers - as soon as they have become proud car owners, the fuel prices are bound to skyrocket or else the fuel will be rationed.

Yes, it very interesting to read here how the situation will play out

nocar

3rensho · Tar Sands Joined: Apr 04, 2005 Posts: 86

This shortage and the subsequent price adjustment by the Chinese is going to be affecting all of the agricultural markets throughout Asia in short order. China exports produce to most of Asia and beyond. I expect prices to continue to trend upwards sharply for foodstuffs throughout Asia.

In the past 6 months alone we have seen announcements on price increases for:

[*] Bread
[*] Beer
[*] Corn (due to more corn being diverted for ethanol)
[*] Feed for farm stock (due to corn being diverted for ethanol)
[*] Chocolate

Tyler_JC

Bas

this is an increasingly good reason for the Chinese government to let their currency appreciate against the dollar (esspecially now that internal market growth has become more important than export growth for the overall economy)
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Cobra_Strike

Eli

My thoughts on this are a little different.

What I am wondering is the real story? is it just about price issues they have the oil but they are not letting go of it.

My bet is no it is not just about price it is actually a problem of supply, they may not have the oil to sell at any price.

pup55 · Expert Joined: May 26, 2004 Posts: 3809

Eli

Pup you know this best we are what a couple of weeks away from testing MOL levels still right?

It makes total sense that China would get there first since they have such unbelievable growth rates.