Emerging from a managed economy has its problems. They don't understand how to deal with supply and demand. Read the article quoted below and you will get an idea...
The capital of Guangdong province is facing a monthly shortfall of about 50,000 tons of refined products, the China Daily quoted Xie Zhaowei, secretary of the Guangzhou Petrol Industry
Association, as saying, according to Agence France-Presse.
As the price of crude has risen around the globe along with Chinese demand to feed an economy ticking along at 9.5 pct annual growth, domestic refineries have been caught short.
Partly to blame are the country's domestic refineries, which are reluctant to ramp up in the face of higher oil prices, said Han Xuegong, a senior analyst for China National Petroleum Corp, the nation's largest oil group.
China's state-controlled oil prices loosely follow movements in the global markets but gasoline is often sold at a discount to keep consumer costs down.
"Asia's largest oil refiner Sinopec relies on imports for much of its crude for refining so the surging crude prices on the world market have greatly hurt the oil giant's refining business when the central government still controls the price of domestic refined oil to stabilize the market," Han said.
Some gas stations was refusing to sell 90-grade unleaded gasoline as station owners claimed they were losing money on it, the newspaper said.
The traffic here is horrendous...and now it is worse. At every gas station, there is a mob of cars, trucks (lorries) and motorcycles, all vying for the front spot to get their alottment of gasoline.
My van had a quarter of a tank in it today...the lowest I have ever seen the needle on the van. My driver went to find gas today. He waited in line for 3 hours to buy RMB100 (USD12.00) worth...about 33 litres. You do the math. You can see how artificially low the price of gas is here.
This country is always worried about social unrest...there is nothing more unresting than having to wait in line for a tank full of gas. One of the guys was telling me about his driver pulling right in front of all the other cars waiting in the queue at the gas station. That is grounds to be shot and dragged through the streets in any other country.
Every country has gone through its periods of scarce fuel supplies and rationing. Will this country be able to deal with it? How long will it take before they begin importing refined products? What sort of hit will this take on the economy? And the biggest question...how has the artificially low price of domestic refined products helped spur the surge in oil prices across the world?
Here is another take on the problem...and here...and this is probably the best of the bunch.
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