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| Home Front Economy |
| OPEC pushes July output to record level |
| 2008-08-12 |
| Posted by:lotp |
| #9 Note that a big part of the reason Chinese car sales are going through the roof is because motorcycles have been banned from a lot of cities. The problem is that many of them can't afford the daily commute to work by car. So they resort to riding buses during the week, and driving for leisure activities during the weekends. If oil prices stay high, the Chinese government might just relent and let motorcycles back on the streets. That would further crater demand, since many drivers on the margin (in terms of being able to afford to drive cars) would prefer to drive motorcycles, especially in China's big city traffic. |
| Posted by: Zhang Fei 2008-08-12 23:41 |
| #8 NS, the steeply-sloped GDP growth of the past is exactly what will change - in part because of oil prices, but in part because of the massive recession that will result from the credit crunch that follows the bursting of worldwide asset (including commodities) bubbles. Our unfortunate historical experience has been that all bubbles are good for the economy - in the form of accelerated GDP growth - until they burst. |
| Posted by: Zhang Fei 2008-08-12 23:32 |
| #7 PB, my point is that high oil prices (along with other country-specific issues) will decrease Chinese economic growth. Here's the latest from Reuters: Oil prices fell on Monday as a drop in crude imports by No. 2 consumer China outweighed concerns over supply disruptions stemming from the conflict between Russia and Georgia. |
| Posted by: Zhang Fei 2008-08-12 23:27 |
| #6 Don't let the facts get in the way of your wishful thinking. |
| Posted by: Nimble Spemble 2008-08-12 22:12 |
| #5 Zhang, there is always a price that will bring supply into balance with demand. It may well be that $140/B is the price at the moment, but my point was that demand is continuosly increasing due to economic growth. The rule of thumb is a 2% increase in energy consumption for each 3% increase in GDP. And no amount of one time energy savings will make that go away, although it may delay it. Oil prices are going a lot higher. |
| Posted by: phil_b 2008-08-12 21:31 |
| #4 pb: One time reductions in demand versus structural increases due to economic growth. It's pretty obvious in which direction oil prices are going. I would dispute that. Gasoline cost is a major chunk of household income for the Chinese, because they earn 1/10 of American incomes. As prices skyrocket, they would tend to cut back much more than the West. The people I know who drive are mainly weekend drivers. Even when oil was around $60 a barrel (up from about $35), people were using their motorcycles more, and their (small) cars less. $140 a barrel is pie in the sky for them. |
| Posted by: Zhang Fei 2008-08-12 20:42 |
| #3 It will be interesting as all the recent discoveries come on line in the next five years or so. |
| Posted by: trailing wife 2008-08-12 20:36 |
| #2 Some of the demand in rich countries will be lost for ever, it noted, saying: “Even if retail prices ease, it seems unlikely that motorists who have purchased smaller cars will revert to gas-guzzling vehicles.” But demand growth in emerging countries remained strong, with Chinese consumption rising above 8m b/d for the first time in June, hitting 8.3m b/d. One time reductions in demand versus structural increases due to economic growth. It's pretty obvious in which direction oil prices are going. |
| Posted by: phil_b 2008-08-12 20:33 |
| #1 The law of supply and demand versus the theory of peak oil. |
| Posted by: Iblis 2008-08-12 16:52 |