sharpe_mind

China: Lots of Oil Price Speculation

Not raising oil prices means no demand destruction and can be fiscally dangerous. This is turning into a major issue across Asia. China has the luxury (so far) of a solid fiscal situation, but you have to realize that China is effectively shorting crude oil. With China subsidizing levels here this also promotes a mis-allocation of resources, as areas of the economy which are least efficient are allowed to continue wasting oil. One can also argue that part of crude oil's rise is the fact that half the world subsidizes oil prices- preventing demand destruction- and with China as the world's fastest growing importer, subsidizing crude exacerbates this.