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emersonbiggins
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Joined: Jul 10, 2005
Posts: 5194
Location: Dallas
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 Posted: Thu Jun 19, 2008 9:38 am Post subject: China raises fuel prices by 18% |
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| Quote: | AP
Oil drops as China says it will raise fuel prices
Thursday June 19, 11:19 am ET
By John Wilen, AP Business Writer
Oil prices drop after China says it will raise fuel prices, which could dampen demand
NEW YORK (AP) -- Oil prices dropped Thursday after China said it will raise fuel prices, a move that could dampen the booming Asian nation's oil consumption. Retail gas prices slid overnight.
Light, sweet crude for July delivery fell $2.10 to $134.58 a barrel on the New York Mercantile Exchange, but dipped more than $3 at times.
China disclosed that it will raise the prices of gasoline, diesel, aviation kerosene and electricity. It was not immediately clear if those price hikes would be implemented by lowering fuel subsidies.
Growing Chinese demand for oil has underpinned the multiyear rally in oil prices. But higher prices could crimp that demand. Concerns about spiking Chinese demand for diesel due to cleanup operations in the aftermath of last month's earthquake contributed to oil's run-up in recent weeks.
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Yahoo
**EDIT**
China Shocks With 18 Percent Fuel Price Rise; Oil Falls
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Last edited by emersonbiggins on Thu Jun 19, 2008 12:42 pm; edited 2 times in total |
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joeltrout
Light Sweet Crude
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Joined: Sep 19, 2007
Posts: 1317
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| Posted: Thu Jun 19, 2008 10:29 am Post subject: Re: China to raise fuel prices |
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Demand Destruction here we come.....
Within 6 months after the Olympics I believe we will see $80 oil.
Mark your calendars my friends.
joeltrout |
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emersonbiggins
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Joined: Jul 10, 2005
Posts: 5194
Location: Dallas
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| Posted: Thu Jun 19, 2008 10:40 am Post subject: Re: China to raise fuel prices |
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The big question right now is will a reduction in subsidies actually lower demand, or merely flatten the growth of demand?
I'm having doubts as to whether total demand will flatten off, much less fall.
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George Carlin |
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ExtractionEngineer
Tar Sands
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Joined: Mar 22, 2005
Posts: 44
Location: Oklahoma USA
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| Posted: Thu Jun 19, 2008 11:23 am Post subject: Re: China to raise fuel prices |
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Relatively little talk about this. This is big news. Demand destruction is beginning in earnest. I too expect prices will pull back a bit. Not going to predict how much, though.
Frankly with top level price controls and a good chunk of the world population I believe China now has more direct control over oil prices than OPEC. Only, unlike OPEC, they are working from the demand side.
Anyone think we'll be sending delegations to the Chinese government in the future to beg them to further decrease fuel subsidies?
I feel a little relief today....still have few more major preparations to finish up....like selling my house that is 20 miles outside of town and moving to a new farm within biking distance of work and farmers market. I needed a few more months. Hopefully this will provide the time.
Later. |
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ExtractionEngineer
Tar Sands
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Joined: Mar 22, 2005
Posts: 44
Location: Oklahoma USA
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| Posted: Thu Jun 19, 2008 11:32 am Post subject: Re: China to raise fuel prices |
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China now has more direct control over oil prices than OPEC
Sun Tzu approves. |
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joeltrout
Light Sweet Crude
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Joined: Sep 19, 2007
Posts: 1317
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| Posted: Thu Jun 19, 2008 11:37 am Post subject: Re: China to raise fuel prices |
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| ExtractionEngineer wrote: | | Relatively little talk about this. This is big news. Demand destruction is beginning in earnest. |
I think many people here don't want to believe that demand destruction, falling prices, production increases, etc... can actually happen.
They ignore BREAKING NEWS like this that has HUGE importance because it proves them wrong in the immediate short-term. They want to be proven right and watch the world as we know it fall to its knees (now).
joeltrout |
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newman1979
Heavy Crude
Joined: Sep 25, 2006
Posts: 105
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| Posted: Thu Jun 19, 2008 11:48 am Post subject: Re: China to raise fuel prices |
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| When prices start to rise, there is very little elasticity in the demand curve. Only when the rise is consistent and persistent over a substantial period of time does the curve become a little more elastic. I don't know where the Chinese curve is now, but I don't think this rise will cause any demand destruction any time soon. |
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UncoveringTruths
Intermediate Crude
Joined: Nov 04, 2004
Posts: 902
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| Posted: Thu Jun 19, 2008 11:51 am Post subject: Re: China to raise fuel prices |
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| Quote: | | China's National Development and Reform Commission said that prices of gasoline, diesel and aviation fuel will increase by 8% beginning Friday. |
Oil tumbles as China raises fuel prices
Is 8% a big deal?
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firestarter
Light Sweet Crude
Joined: Mar 19, 2006
Posts: 1181
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| Posted: Thu Jun 19, 2008 12:02 pm Post subject: Re: China to raise fuel prices |
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The front month for crude expires tomorrow, which, in part, has something to do with today's price action.
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frankthetank
Fusion
Joined: Sep 16, 2004
Posts: 4931
Location: Southwest WI
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| Posted: Thu Jun 19, 2008 12:11 pm Post subject: Re: China to raise fuel prices |
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Time for the Chinese to get back on the bikes.
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frankthetank
Fusion
Joined: Sep 16, 2004
Posts: 4931
Location: Southwest WI
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| Posted: Thu Jun 19, 2008 12:28 pm Post subject: Re: China to raise fuel prices |
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Some more:
| Quote: | The price of gasoline will be raised by 17% to 6,980 yuan per ton, from 5,980 yuan; diesel prices will be raised by 18% to 6,520 yuan per ton, from 5,520 yuan; and jet-fuel prices will be raised by 25% to 7,450 yuan per ton, from 5,950 yuan.
One ton of fuel is converted into 308 gallons, according to energy-information provider Platts. Using this conversion rate, China's new gasoline price is at about $3.29 a gallon, and the diesel price is at $3.08 a gallon. |
Pretty good jump. Should be interesting to see the results. How willing are the new Chinese to cut consumption?
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misterno
Heavy Crude
Joined: Mar 07, 2007
Posts: 318
Location: Houston, TX
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| Posted: Thu Jun 19, 2008 12:35 pm Post subject: Re: China to raise fuel prices |
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| ExtractionEngineer wrote: | China now has more direct control over oil prices than OPEC
Sun Tzu approves. |
Approved, double checked and confirmed by misterno |
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geojap2
Tar Sands
Joined: Jun 12, 2008
Posts: 46
Location: Texas
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| Posted: Thu Jun 19, 2008 12:51 pm Post subject: Re: China to raise fuel prices |
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| joeltrout wrote: | Demand Destruction here we come.....
Within 6 months after the Olympics I believe we will see $80 oil.
Mark your calendars my friends.
joeltrout |
Man Joel, I don't know about that. The dollar is in a world of hurt at the moment. That alone will keep pressure on oil prices.
Besides, the Chinese are rich enough now that this will not have the same effect as it would have 10 years ago. I'm really interested to see how much Chinese demand this actually destroys. The average Chinese uses far less oil than an American anyway, so the Chinese consumption isn't too terribly great (per capita) as it is. I just don't see this destroying demand a whole lot in China. |
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dorlomin
Light Sweet Crude
Joined: Aug 05, 2007
Posts: 1151
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| Posted: Thu Jun 19, 2008 12:59 pm Post subject: Re: China raises fuel prices by 18% |
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I am lost on the Chinese economy. My hunch is that it will suffer a big set back with the US economy slowing down and US consumers purchasing less, however that is all guess work and I have no real insight into the internal growth characteristics of the chinese economy.
If there internal market growth is strong enough then this may only slow it slightly, reducing the increase of chinese oil demand. The flip side of the coin is price controls, the Chinese may retain price controls on many byproducts and so only some price increases may filter through.
I can see why oil would fall back later this year as US car drivers drive less, buy more efficient models and airlines lay up older planes.... I just dont really in all honesty know if that is what will happen. Too many variables beyond my ken. |
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shortonoil
Fission
Joined: Dec 02, 2004
Posts: 2752
Location: VA USA
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| Posted: Thu Jun 19, 2008 1:02 pm Post subject: Re: China raises fuel prices by 18% |
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frankthetank said:
| Quote: | | Pretty good jump. Should be interesting to see the results. How willing are the new Chinese to cut consumption? |
The new Chinese will be as willing to cut consumption as much as the old Americans have been. In the US, with a 34% increase in gasoline prices over the last year, we have seen a 1.7% reduction in demand. An 8% price increase in China will have the same effect. Their 250 million new middle class citizens will keep consuming, while their 1.1 billion peasants will have to learn to live with a little bit less.
This increase in price is just political posturing by the Chinese government; it is just putting some veneer on the image of China before the Olympics. As news, it is nothing more than pathetic! |
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