China Raises Energy Prices, Lowers Boom on Crude

The oil price drop is definitely due to the price hikes announced by China. China's demand for oil keeps going up because its domestic prices are not market set. Through this, I hope the Chinese will learn how deeply any market distorting policies can affect the rest of the world in big ways.

China's demand for oil is still expected to increase 20% each year. The world demands energy,but we will all need to learn about conservation and efficiency. Bush and his oil buddies want to drill for more and Mcain wants 45 more nukes even though we currently have 60,000 TONS of radioactive waste in this country and uranium mining destroys groundwater supplies. It's time for smart people to harness the power of the Sun and the Wind and new mass transit everywhere. New thinking, investment in jobs in new technologies, tax credits for those of us who want to be part of the solution instead of spending all of my tax dollars on the world's biggest out-of-control military industrial complex in history. Let's get smart and solve this problem and not blame China. We are the gluttons of the world and it is time for change...

This is an interesting take from Beat the Dart -- what do you think? Whether the move was cosmetic to cause commodity prices to contract requires further analysis to determine, while shortsighted investors welcome the news after weeks in which rising prices have pinned down investor sentiment with fears that the run-up would force US businesses and consumers to curb spending. However, given the highly vulnerable state of the US and European economies, what would happen to global growth if the Chinese business model also started to materially contracted? ... Our Subjective Probability Model (SPM) projects, even with Chinese inflation spiking, notable back-pedaling on market reforms and falling export demand, '08's net growth should be eight-percent, sufficient to support international equilibrium. ... China’s remarkable resilience to both the 2001 global recession and the 1997-98 Asian financial crisis was based on prudent government policies to ensure the emerging middle class remains vibrant. Whether such policies can be effectively maintained in the future is pure conjecture, since dealing with inflation through price caps cannot continue without dismantling the country's free enterprise dynamics. ... Using the SPM matrix to address the issue, the conclusions are damaging to world trade. If China accelerates exchange-rate appreciation, thereby reining in money growth, its economy would slow dramatically, while growth in Europe and the US would weaken further. Thus, low global interest rates, high commodity prices and strong global growth would be history -- the entire world would fall into a 1930's type of rescission. Pundits losing sleep over US growth ought to pay more attention to rising risks coming from China. Henry M. Paulson, Jr. are you listening? Since being appointed to be the 74th Secretary of the Treasury on June 19, 2006, you have managed to "defend the dollar" by watching it depreciate by 35% and "maintain oil prices" which have increased 115%. Now what?

This is an interesting take from Beat the Dart -- what do you think? Whether the move was cosmetic to cause commodity prices to contract requires further analysis to determine, while shortsighted investors welcome the news after weeks in which rising prices have pinned down investor sentiment with fears that the run-up would force US businesses and consumers to curb spending. However, given the highly vulnerable state of the US and European economies, what would happen to global growth if the Chinese business model also started to materially contracted? ... Our Subjective Probability Model (SPM) projects, even with Chinese inflation spiking, notable back-pedaling on market reforms and falling export demand, '08's net growth should be eight-percent, sufficient to support international equilibrium. ... China’s remarkable resilience to both the 2001 global recession and the 1997-98 Asian financial crisis was based on prudent government policies to ensure the emerging middle class remains vibrant. Whether such policies can be effectively maintained in the future is pure conjecture, since dealing with inflation through price caps cannot continue without dismantling the country's free enterprise dynamics. ... Using the SPM matrix to address the issue, the conclusions are damaging to world trade. If China accelerates exchange-rate appreciation, thereby reining in money growth, its economy would slow dramatically, while growth in Europe and the US would weaken further. Thus, low global interest rates, high commodity prices and strong global growth would be history -- the entire world would fall into a 1930's type of rescission. Pundits losing sleep over US growth ought to pay more attention to rising risks coming from China. Henry M. Paulson, Jr. are you listening? Since being appointed to be the 74th Secretary of the Treasury on June 19, 2006, you have managed to "defend the dollar" by watching it depreciate by 35% and "maintain oil prices" which have increased 115%. Now what?

What you refer to as the Chinese middle class would be considered poverty level here. It's not just about economic theories. Where is the money actually going? What is our productivity actually producing? Is everything just about making money? I know some of the wealthiest people on the planet and I can tell you that they are not the happiest. I agree that we need a strong middle class. Eliminate poverty and hunger, health care for all, a chance to retire someday. Greed is not good. Main street matters more than Wall Street. The government is being run by corporate lobbyists. We need to see ourselves as a society that we can be proud of instead of just me, me, me. IMHO

What you refer to as the Chinese middle class would be considered poverty level here. It's not just about economic theories. Where is the money actually going? What is our productivity actually producing? Is everything just about making money? I know some of the wealthiest people on the planet and I can tell you that they are not the happiest. I agree that we need a strong middle class. Eliminate poverty and hunger, health care for all, a chance to retire someday. Greed is not good. Main street matters more than Wall Street. The government is being run by corporate lobbyists. We need to see ourselves as a society that we can be proud of instead of just me, me, me. IMHO

The rise in oil prices is not commensurate with the demand and the SEC investigation will surely bring out the speculative elements. With demand falling, oil could easily go under $100 and stay there without causing ant real threats to the worldwide economy SalesCircular.com - all the comparisons I need

the only cure for high oil prices is high oil prices. when will people understand economics.supply & demand 101.the more oil costs the more people will respect it (see conservation/efficiency).

I agree with Dr. Huang. China is the poster child for new world demand for energy. dvdcrtpss has it right when he says the only way to get Americans to respect high oil prices is to have high prices. You must ask why do we have 400 hp SUVs that match major high performance sports cars for handling and 0 - 60? Because spoiled Americans are lemmings to th eauto and oil businesses. Gasoline generally have great profit margins. Bottom line - If China doesn't buy oil, Sri Lanka will. That is th enew reality, along with th erealization that th eUS no longer rules th eworld economy in th eway it has for the past 60 years.

The G8 meeting must have driven China to raise fuel prices. Chinese demand for oil will not stop here. Many Chinese are buying their first car. It's not like the US, where one can swap an SUV for a gas sipper. Chinese people will buy cars and gasolene no matter the price of fuel. The same holds true for the developing economies...

This country is in control of the second largest known oil reserve in the world. Iraq. Why not open the valves and let them pay us in oil? Then who cares what world oil prices are;unless we might to share some.. Isn't this what the war there all about? Duh!