Tuesday December 04, 2007

Living the diesel shortages in China

321energy.com :

Dave DuByne : I am currently living in China and I hear the Chinese media speaking about diesel shortages ... the story goes something like this: Inflation is out of control at 6.5% and prices of everything have at least doubled in the last year and a half. Wages remain almost stagnant with no upward rise to match the inflation rate. With unfulfilled dreams of car and home ownership, average workers trudge through their days knowing that the basic necessities and a night out on the town is all they will get in life. With inflation running at 6.5 per cent now what little income there was is being eroded, and the dreams of nights out on weekends are starting to disappear. Doubling food prices are making the country tighten spending and more grumbling from the average person on the street.

To highlight social stress inflation is causing: "Stampede leaves 3 dead, 31 injured" is a headline that sums up the situation. Carrefour supermarket had a special on cooking oil which was discounted $1.55 from the regular $7 price. The promotion saw bargain shoppers lining up at the store entrance at 4 a.m. When the doors opened at 8:40a.m., there was a stampede to the aisles. Fights over the bottles of oil began, and shoppers were pushed to the floor. Some were trampled to death. Those that went to the hospital for injuries had bruises and gashes to the face, hands and forearms caused by other shoppers using cans as weapons to loosen the grip of those with bottles in hand, and retrieving dropped bottles. This incident is also a result of bio-fuel production interfering with food production and driving up cooking oil prices. Inflation was not the only cause.

Chinese citizens have put the equation together: Higher fuel prices = higher food prices. Based on the complaints I hear from my students about high prices, the central government would be asking for trouble with another fuel price hike. This puts the central government squarely in the center of a catch 22. If they raise fuel prices, refiners will produce more since they are not losing money, but civil disorder may occur. If they do nothing and the shortages will continue for the next six months, the manufacture and export sector will continue to slow down, slowing the entire economy.

Those are individual drivers with cars, but diesel shortages for the transport and logistics industry, which support the bread and butter of the Chinese economy, manufacturing and export. Long lines at petrol stations are common countrywide, and this is not limited to the east coast, as some western media have reported. All cities and all provinces are experiencing lack of adequate diesel. The obvious slowdowns in delivery of imported materials to factories from ports, missed loading dates for containerized shipment ...

See also :

1. China in grip of inflation

(2007-12-04 15:22:15 SGT) [Energy] Permalink

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