China and price controls on oil

Discussion in 'Commodity Futures' started by The Kin, Aug 17, 2005.

  1. I was just reading up about this province in China. Apparently most pumps are dry and the ones that are open have hour long line-ups. Manufacters are being forced to shut down early due to lack of oil and are screaming at the two biggest oil providers in China to boost refinery production. But the refineries are reluctant to purchase oil on the global market at such sky high prices then re-sell oil products at government set prices incurring a significant loss.

    China is limiting supply but they probably don't mind since their GDP is growing so fast. But what about the future... if China decides to force these companies to buy oil and resell at cheaper that could spell disaster for the rest of the world. If even if China let the market decide the price of oil, it would still increase demand out of China significantly because right now they're rationing. Even the status-quo is seeing China's consumption grow faster than the growth rate in extraction.

    Me thinks oil is going up up up!
  2. just21


    They should stop subsidising it and demand may decline.