maximax

Is the Oil and Energy Bubble About to Burst?

Not so sure what difference that miniscule increase in the gasoline retail price really makes. In Beijing a litre of gasoline is RMB5.34. Small Chinese refiners would still make a loss so they probably won't resume production. The large state owned ones have to produce anyway but they will still prefer to export their output to the world markets instead of selling at huge losses in the domestic market while begging the government to send in a massive check to restore their balance sheets. The government would have to prevent Sinopec et al to export refined products and set refining targets, but Sinopec et al are increasingly independent. At the same time the government is heavily concerned about inflation as China has a history of civil unrest sparked by inflation, and the Olympics are near... Myanmar's unrests were triggered by fuel price hikes, so hell would freeze over and Bush would go green before the Chinese government ever allowed refined products retail prices that could yield profits to domestic refiners. Was the latest price increase really to curb consumption? The government's main priority is economic growth (unsurprisingly, since much of the non-state owned economy is owned by commies and their families). It was a timid attempt to alleviate fuel shortages caused by the refinery game outlined above. Looking at other commodities driven into price bonanzas by Chinese growth (eg iron ore) it seems that they will push hard to lower the price through negotiations and alliances with key suppliers, but I am not aware of serious efforts to curb consumption. Ok there are these cuts in export rebates, but they have not changed much. Also, these unrests at Chinese petrol stations seen recently are not entirely uncommon as with or without shortages there are always long queues at petrol stations at the last day before the a price increase.