A curious story from Drudge, the PRC has experienced a full percentage point drop in oil consumption over the last quarter. Chalk another one up for free-market capitalism.
The most likely cause, said Fatih Birol, the agency's chief economist and head of economic analysis, was that China had not been allowing the domestic price of electricity and many refined products, like gasoline and diesel fuel, to rise nearly as quickly as world prices. This has caused power-generating concerns and service stations to sell less electricity, and less gasoline and diesel fuel, so as to limit their losses.
Many Chinese power stations have stopped burning fuel oil to produce electricity because the prices they are allowed to charge per kilowatt are not high enough to cover the cost of importing fuel. Chinese refiners have been selling part of their output overseas at higher prices than they can get in the highly regulated domestic market - where gasoline, for example, now sells for $1.63 a gallon.
Somewhere in America somebody just said, most likely out loud, "Wow...they got gas for a buck sixty-three in China?"
Somewhere in China somebody just said, "Hey...what's wrong with this pump?"
Kind of puts these guys in perspective doesn't it?
Finally, it is time to think seriously about price controls. Richard Nixon did. The oil giants clearly do not have complete control over gas prices, but they do have the ability to set prices above competitive rates. Why should industry regulate the market instead of democratic government authorities?
Be sure to check out their book too, complete with Raph Nader introduction and Chomsky quote.
Also posting: The Oil Drum
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