Daily Wisdom

June 22, 2008

China's Contribution To Oil Prices

I knew that China's economic growth was contributing to high oil prices, but I had no idea to what degree. I was surprised to find the following information in recent days. First, according to an article HERE with a link to the data source HERE, it appears that China has surged past the U.S. in terms of manufacturing exports...


Click To Enlarge

This rapid growth has caused China to become a major world consumer of raw materials and energy. In the 1992-93 time frame, China outstripped its ability to produce enough oil domestically to keep up with its own demand. That's when China became a net oil importer...


Since at least 2005, it has been observed that there appears to be a close correlation between China's oil imports and the world price of oil. Fully a third of the world's growth in oil demand has been attributable to China. I found the following chart HERE...


The article is dated March 15, 2005 when oil prices were in the vicinity of $40-45 per barrel. Based on this chart, the authors were predicting prices of $70-75 per barrel. Please note that the figures for Chinese oil imports in this chart are a "forecast" for the period 2005 and beyond. I drew in the actual price of oil in red to show how closely the prices followed the forecast. Unfortunately, I do not have any recent monthly data for Chinese oil imports though I scoured the Internet attempting to find some. It would be interesting to see how close the correlation has continued through to the present.


According to another article dated May 8, 2007, China’s total oil consumption in 2006 reached 7.4 million barrels per day, while growth in domestic production rose less than 2 percent to 3.7 million barrels per day. The International Energy Agency forecasts demand for oil in China this year will rise 6.8% to 7.6 million barrels per day and that by 2030 Chinese oil imports will equal current imports by the U.S.

China's demand for oil, which is projected to reach 12.8 million barrels/day by 2025, is commonly cited as a major contributing factor to the recent run up in global oil prices. Economists have found a close correlation between Chinese demand for oil and crude prices in recent years. (emphasis added)



I expect we will only see the trend continue in the face of news such as the following...

Chinese oil imports rose 25% in May (2008) according to data released today. Reportedly China is stockpiling oil ahead of the summer Olympics and to cover increased demand after the earthquakes.


13 Comments:

At 6/22/2008 2:03 PM , Anonymous R.A.M. said...

I had to scan over this article Hawkeye,--sorry! It's just that I am working on my new automotive engine that runs off a combination of lead and salmonella.

Thanks to our "friends" in China and Mexico, there is a lifetime supply of both being sent here.

Off topic but, I had to laugh yesterday when I heard Shelia Jackson Lee say, "--it is hard to put lipstick on a pig!"

The truth is, she SHOULD know!

 
At 6/22/2008 2:24 PM , Blogger Hawkeye® said...

R.A.M.,
Sounds like a great idea... lead and salmonella combined in one fuel! And I assume that the emissions are pure water vapor? You will be rich beyond your wildest dreams! (Don't forget us peons.)

(:D) Best regards...

 
At 6/22/2008 9:12 PM , Blogger Barb said...

The USA needs to start building Nuclear Power Plants. then when we finally do drill for our own oil ,we can sell it to China,maybe even make them beg for it as Our leaders have to. It sure would give us the upper hand in many situations.
Yeah , Nuke Power scares me,butso do the alternatives.

 
At 6/23/2008 1:12 AM , Anonymous camojack said...

Are you responding to comments now?!

Anyway, regarding this post, I am surprised that you just became aware of all this...as savvy as you seem to be on such matters, generally.

My idea is to transition to all (non-polluting) nuclear power sources, and use all (non-polluting) electrical vehicles. Of course, such a transition will take years, decades even, but then we would not be dependent upon fossil fuels any longer.

Building the nuclear powerplants that McCain proposes would be an excellent start, but we also need the infrastructure to recharge the electric vehicles, so I'd say that gas stations should start putting in rapid-charging points. Ideally, you could then recharge an electric vehicle in about the same amount of time it takes to fill up a gas tank nowadays. Eventually the recharging points would completely replace the gas pumps.

Other alternative energy sources will also come into play; personally I'm planning to run my retirement chateau on solar and wind energy.

There are a number of other "green" ways to generate power, too...

 
At 6/23/2008 8:27 AM , Blogger Hawkeye® said...

Barb,
Amen. We need to increase ALL forms of energy if we want to remain competitive. That means nuclear, coal, oil, hydrogen, battery, wind, solar, geothermal, etc. The American economy is struggling with one hand tied behind its back. And if you look behind your back, you're sure to see a Lib Dem.

(:D) Best regards...

 
At 6/23/2008 12:55 PM , Blogger Hawkeye® said...

Camo,
I try to respond to most comments, but sometimes it takes me awhile, or sometimes there's nothing more to say.

I didn't "just" become aware of all this, but I didn't know the full extent of China's impact. If you listen to the mainstream media, it's all the fault of "Big Oil", dontcha know. Even Bill O'Reilly seems to have jumped on the "market manipulation" bandwagon.

If China's impact on the market is so large, and the "correlation" between their oil imports and price is so "close", why don't we see more charts like this on the news? You'd think somebody out there (even "Big Oil") would be publishing it to dispel the myths of greed.

And good luck with "Chateau de Camo".

(:D) Best regards...

 
At 6/23/2008 3:59 PM , Blogger Beerme said...

Impressively researched and presented, my Brother!

Kudos!

 
At 6/23/2008 8:51 PM , Blogger Hawkeye® said...

Beerme,
THANKS! You're going to give me a big head... which should be reserved strictly for one of your fine brews!

(:D) Best regards...

 
At 6/25/2008 9:09 AM , Blogger Ms RightWing's Ink said...

I'm glad to see the Chinese killing themselves off with pollution and carbon. perhaps they too, can have dirty old factory towns someday that sit and rot away like places here in Ohio and Michigan

 
At 6/25/2008 5:25 PM , Blogger Hawkeye® said...

Ms RW,
Thanks for stopping by! God bless you through your upcoming surgery. Prayers goin' up!

Best regards...

 
At 6/25/2008 6:52 PM , Blogger Elroy said...

Yeah, Hawkeye, it's all the Lib-Dems fault!

All those socialist industrialists that sent their manufacturing to China! For shame! And those commies at Wal-Mart that import the goods China makes! Traitors!

And Barb! Such compassion! Happy to see 1.2 Billion people die for being successfully competitive!

But hang on! Wasn't all this global competition malarky...Reagan's fault? Reagan and Thatcher and Freidman? Gee! Didn't quite pan out, huh? Looks like the lefties were right all along, hey? What a surprise!

And, my, dears, Nuclear will not help you – it takes too long to bring online, no one still knows what to do with the waste, if everybody does it then there will be the same pressures on plutonium as there are now on oil – not enough to go round – and, of course, you can't afford it because you've spent your money on war.

So say a big thank you to all those greenies, hippies and tree hugging liberals who have been working hard in the face of ridicule on the alternative energy solutions that camojack now takes for granted. You're welcome!

Cheers

Elroy

 
At 6/27/2008 4:22 PM , Blogger Hawkeye® said...

Elroy,
Hello. I thought you fell off the planet or something. Perhaps it was just wishful thinking (:D)

Anyway, as I mentioned in a previous retort, I have reliable information that TIME magazine (a socialist bastion if I ever saw one) conducted a project a few years ago where they not only farmed out the work overseas, but they kept moving the work from country to country as they found lower-cost labor. They started in India for example, then switched to South Korea, then went to Indonesia, etc. Don't assume that all capitalists are on the right side of the aisle. But you may be correct about the commies at Wal-Mart. As I recall, Hillary Rodham Clinton served on Wal-Mart's Board of Directors for 6 years (see HERE).

And what are you ranting about? Why do you accuse Barb of suggesting that "1.2 billion die for being successfully competitive"? I don't see any connection at all between your blather and her comment. Are you off your meds again?

And as far as "this global competition malarky" you speak of... I have no problems whatsoever with global competition (assuming it's fair, of course). And aside from the fact that China has been unfairly subsidizing some of its exports lately (for which it has been slapped with tariffs), I congratulate China on their economic success. If only the US government would support its industry as enthusiastically as the Chinese government does theirs!

Instead, the US government continually hamstrings US industry with over-regulation, high taxes, bureaucratic impediments, and high energy prices. Yes, you heard me correctly. I blame the government in this country for our high energy prices. It has nothing to do with the oil companies. If the big, bad oil companies had been allowed to drill in this country where they know the oil is abundant (ANWR, Atlantic coast, Gulf coast, Pacific coast), then today we would have a much greater supply to meet the growing demand. But we have mostly Liberal Democrats and Liberal Environmentalists (plus a few RINOs) to thank for their continuous opposition to increasing our oil supply.

If the US government had done a better job of keeping the US dollar strong, then oil would be less expensive than it is today. Since oil is traded in US dollars, our easy-money fiscal policy has contributed to high world-wide energy prices. If the US government had not mandated the increased use of ethanol, then world food prices would not be so high either. What a dumb idea... to burn food in our cars instead of petroleum. And then we wonder why food costs skyrocket... DUH!

Personally, I favor Reagan's approach. He had it nailed dead-on. Here for example are some of his quotes...

"All the waste in a year from a nuclear power plant can be stored under a desk."

"Approximately 80% of our air pollution stems from hydrocarbons released by vegetation, so let's not go overboard in setting and enforcing tough emission standards from man-made sources."

"Governments tend not to solve problems, only to rearrange them."

"Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves."

"Government's first duty is to protect the people, not run their lives."

"Man is not free unless government is limited."

"One way to make sure crime doesn't pay would be to let the government run it."

"The best minds are not in government. If any were, business would steal them away."

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

"The most terrifying words in the English language are: I'm from the government and I'm here to help."


As for nuclear power plants taking a long time to come on line... then we better get started immediately! Likewise for every other energy source. If it takes a long time to drill for new oil... then we better get started immediately! If it takes a long time to develop new green energy... then we better get started immediately! If it takes a long time to build a hydro-electric plant... then we better get started immediately!.

As far as thanking "all those greenies, hippies and tree hugging liberals"... for what? I have yet to see the solar-powered automobile, or wind-powered 18-wheeler, or geothermal-powered railroad train that makes any sense. So much for alternative energy, eh? Oil will be around for awhile I'm afraid. Get used to it.

Cheers

 
At 7/01/2008 3:31 AM , Blogger Elroy said...

‘Don't assume that all capitalists are on the right side of the aisle.’

I don’t assume anything. Capitalists are everywhere – it is a capitalist world. But about your TIME Magazine project – ‘I have reliable information’ means that you heard about it somewhere but have no real idea what you are talking g about, but if it was a ‘project’ then maybe they were experimenting to see just how far down costs could be driven. Who knows what they were up to? I don’t, and neither do you.

‘But you may be correct about the commies at Wal-Mart. As I recall, Hillary Rodham Clinton served on Wal-Mart's Board of Directors for 6 years.’

This article does not show that Wal-Mart are commies, it shows that HRC is not.

‘And what are you ranting about? Why do you accuse Barb of suggesting that "1.2 billion die for being successfully competitive"? I don't see any connection at all between your blather and her comment. Are you off your meds again?’

No, the Zsycopraxin is kicking in nicely as we speak, but what I am ‘ranting’ about is this comment: ‘I'm glad to see the Chinese killing themselves off with pollution and carbon.’ It was made Ms RW and not Barb, so my apologies for that, but nevertheless that is what this says. Isn’t it?

‘And as far as "this global competition malarky" you speak of... I have no problems whatsoever with global competition (assuming it's fair, of course).’

What constitutes ‘fair’? Are the agricultural protections of the US, Europe and Japan ‘fair’ to Africa? Is it ‘fair’ for the US to dump produce on Africa?

‘And aside from the fact that China has been unfairly subsidizing some of its exports lately (for which it has been slapped with tariffs), I congratulate China on their economic success. If only the US government would support its industry as enthusiastically as the Chinese government does theirs!

Instead, the US government continually hamstrings US industry with over-regulation, high taxes, bureaucratic impediments, and high energy prices.’

Wow! You…you..commie, you! Two reasons that Chinese industry is so successful is that the labor costs are so low and that the Chinese administration keeps a lid on the Yuan. But do you really want to see labour conditions like China has in Detroit or Cincinnati? Isn’t the state support of business anathema to Free Trade™ers like yourself?
Don’t you support small government and the retreat of the state? Isn’t the Free Market™ supposed to rule? And do you really want to see the USA as polluted as China?

Do you know what we call central planning, state support of private industry, slave labour, a one-party state, oligarchies, fanatical surveilance and political repression? We call it ‘Fascism’, so, Adolph, it’s good to know where you stand.

‘Yes, you heard me correctly. I blame the government in this country for our high energy prices. It has nothing to do with the oil companies.’

Ho ho ho. The inability of the right to come to grasp with the most fundamental of issues never fails to astound yours truly. It has everything to do with the oil companies! Look at the vast profitsmade over the past few years – why would they give that up? They are working in the best interests of their shareholders, as they are legally required to do. Don’t you know about supply and demand? Squeeze supply and increase demand! That’s why there has been so little investment in refinery capacity over the last couple of decades, to ensure a smaller supply of therefore more valuable petrol. Dur!

And if you need more proof of Big Oil’s culpability, take a look at this:
http://www3.gregpalast.com/obama’s-secret-war-profiteering-tax/#more-2026

And this:

http://www.gregpalast.com/wp-content/uploads/smiraqtimeline.jpg

‘If the big, bad oil companies had been allowed to drill in this country where they know the oil is abundant (ANWR, Atlantic coast, Gulf coast, Pacific coast), then today we would have a much greater supply to meet the growing demand. But we have mostly Liberal Democrats and Liberal Environmentalists (plus a few RINOs) to thank for their continuous opposition to increasing our oil supply.’

Yawn. The deep sea and ANWR oil is not going to provide cheap oi because it’s too expensive to bring up and there’s not enough of it. Plus, have you never heard of ‘World Import Parity Pricing’? That is the mechanism whereby those poor, sweet innocent oil companies ensure that they will get a uniform price across the world, regardless of where the oil was produced.

‘If the US government had done a better job of keeping the US dollar strong, then oil would be less expensive than it is today. Since oil is traded in US dollars, our easy-money fiscal policy has contributed to high world-wide energy prices.’

Not necessarily. See WIPP above. And as for keeping the dollar strong, go storm the doors of Alan Greenspan, Milton Friedman and your boy Ronnie, who all set in train and maintained the financial revolution that is currently falling in a screaming heap.

‘If the US government had not mandated the increased use of ethanol, then world food prices would not be so high either. What a dumb idea... to burn food in our cars instead of petroleum. And then we wonder why food costs skyrocket... DUH!’

Duh,indeed. Be careful what you vote for.

‘Personally, I favor Reagan's approach.’

But it’s all his fault!

‘He had it nailed dead-on. Here for example are some of his quotes...’

OK, let’s have a look then.

"All the waste in a year from a nuclear power plant can be stored under a desk."



Note he didn’t volunteer to put it under HIS desk. And maybe he’s right, but he conveniently forgets (What a surprise!) to mention the extensive lead casing etc required so that the waste does not irradiate half of the Eastern seaboard. Typical conservative canard – sounds good on the surface but complete bollocks underneath due the absence of certain salient facts.

"Approximately 80% of our air pollution stems from hydrocarbons released by vegetation, so let's not go overboard in setting and enforcing tough emission standards from man-made sources."


Of course, when it comes to facts, if you’re a conservative you can jus make them up! I can find no source for this quote or the factoid it relies on – the only place I can find it is in The Definitive Compendium Of Misinformation, so that’s enough of that.

But it’s nice to know that Ronnie was happy to have everywhere look like Bejiing and Los Angeles with people dropping dead of respiratory disease ‘cos hey, it’s all those veges’ fault!


"Governments tend not to solve problems, only to rearrange them."

Conservatives have no interest in having governments solve problems because that might prove the efficacy of the goverments, but the statement is nonsense – governments have solved many problems ¬– indeed, due to the scale of some problems, government is the only institution capable of solving them.

"Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves."


If it were true, that is if he really believed it, then it wouldn’t be so bad, but is it is…

The truth is that conservatives don’t really want to protect us from each other; if they did, they would regulate to stop the brutal exploitation of labour that exists, and the corporate savagery that monopolizes all it can.

Furthermore, if they truly felt that government was beyond its limits
In deciding to protect us from ourselves then it would back off the various abortion, gay marriage, censorship and recreational drug statues it is so fond of.


"Government's first duty is to protect the people, not run their lives."



See above.

"Man is not free unless government is limited."


Man is not free unless government is effective; Man is not free unless government is vigilant; Man is not free unless government is disinterested.

"One way to make sure crime doesn't pay would be to let the government run it."


Again, not true. The government does run crime, and it pays very well indeed. http://www.fpif.org/briefs/vol1/cia_body.html

"The best minds are not in government. If any were, business would steal them away."


This assumes that the best minds are conservatives and thus only interested in money, a notion, although conveniently and superficially humorous, which we all know to be false.

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."



Ho ho ho. It’s all very well to be facile, but a USA without taxes, regulations and subsidies would be a place you don’t like very much.

"The most terrifying words in the English language are: I'm from the government and I'm here to help."



No, the ten most terrifying words in the English language are ‘I’m from a transnational corporation and I’m here to help.’

As for nuclear power plants taking a long time to come on line... then we better get started immediately! Likewise for every other energy source. If it takes a long time to drill for new oil... then we better get started immediately! If it takes a long time to develop new green energy... then we better get started immediately! If it takes a long time to build a hydro-electric plant... then we better get started immediately!.



You don’t have time for any of it. Oil is $140 + per barrel and rising now. The climate is changing now. Maybe, just maybe, had GWB gotten started when he took office then y’all might be in with a chance, but now? Uh uh…

Anyway, Bush has borrowed $1 trillion from your pals the Chinese to fight in Iraq, so y’all can’t afford any of them.

And who is going to build them all? Not the government, surely? Then who? And won’t they be charging market rates?

The only possible solution is the green technologies that those European socialists in Germany and Norway et al have been develping all these years. Solar power, baby! The Libtards’ Socialist Republic of California are pretty good at this stuff too!

Of course, the next I’m going to do is blame GWB for the failure of the USA to be on the cutting edge of solar technologies! Typical!
Well yeah, because it’s his fault! Read this:
http://dir.salon.com/story/tech/feature/2004/10/25/renewable_technology/index.html

As far as thanking "all those greenies, hippies and tree hugging liberals"... for what? I have yet to see the solar-powered automobile,

You really haven’t been paying attention, have you?

http://en.wikipedia.org/wiki/Solar_car

‘or wind-powered 18-wheeler, or geothermal-powered railroad train that makes any sense.’

Hey! Us tree huggers can only do so much! The government, however, could be helping us, but hell! They just rearrange the problems! And nice try with your ‘wind-powered 18-wheeler, or geothermal-powered railroad train’, but they make as much sense as the creationists ‘Duckosaurus’ and ‘Crocoduck’ or whatever they babble on about. The truth is, the 18-wheeler is gone, matey.

So much for alternative energy, eh?

Au contraire! Look at this: http://www.solardecathlon.org/

Oil will be around for awhile I'm afraid. Get used to it. 

Cheers

You are witness to the end of the oil age. Get uses to that. Oil is running out, and what there is will be mopped up by your pals, the Chinese. Be careful what you wish for.

Cheers

Elroy

 

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