Oil 1 Peak Oil 21
Download 9.54 Mb.
|
- Navigate this page:
- Economy Link
- Economy Internal
Economy LinkThe Chinese economy is dependant on oil prices and availability (Financial Post, 5/23/08, written by Diane Francis, “Oil Shock: China and Mexico, not Exxon, stupid”, http://network.nationalpost.com/np/blogs/francis/archive/2008/05/23/oil-shock-china-not-exxon-stupid.aspx) The demand side China and India are undertaking a Marshall Plan every two years, building massive infrastructure, urbanizing their populations and industrializing. The Beijing Olympics will open the world's eyes to what is going on there this summer. Recent estimates are that in the next 17 years, about 300 million Chinese living in rural areas will be moved to cities which have yet to be built. They will want roads, cars, buildings and streetlights. The equivalent of five New Yorks, and some 50,000 skyscrapers, are on the drawing boards. Already, some 174 subway systems are under construction and a power plant is completed every month. There are already 200 cities in China bigger than Dallas. Economy LinkRising oil prices kill the Chinese economy (The Telegraph, 7/7/08, “Oil Price Shock Means China is at Risk of Blowing up” http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/07/ccview107.xml#comments ) The great oil shock of 2008 is bad enough for us. It poses a mortal threat to the whole economic strategy of emerging Asia. The manufacturing revolution of China and her satellites has been built on cheap transport over the past decade. At a stroke, the trade model looks obsolete. No surprise that Shanghai's bourse is down 56pc since October, one of the world's most spectacular bear markets in half a century. Asia's intra-trade model is a Ricardian network where goods are shipped in a criss-cross pattern to exploit comparative advantage. Profit margins are wafer-thin.
Economy LinkThe Chinese economy is dependant on oil prices and availability (Financial Post, 5/23/08, written by Diane Francis, “Oil Shock: China and Mexico, not Exxon, stupid”, http://network.nationalpost.com/np/blogs/francis/archive/2008/05/23/oil-shock-china-not-exxon-stupid.aspx) The demand side China and India are undertaking a Marshall Plan every two years, building massive infrastructure, urbanizing their populations and industrializing. The Beijing Olympics will open the world's eyes to what is going on there this summer. Recent estimates are that in the next 17 years, about 300 million Chinese living in rural areas will be moved to cities which have yet to be built. They will want roads, cars, buildings and streetlights. The equivalent of five New Yorks, and some 50,000 skyscrapers, are on the drawing boards. Already, some 174 subway systems are under construction and a power plant is completed every month. There are already 200 cities in China bigger than Dallas. Economy LinkOil prices and availability are crucial to Chinese economic growth (Asia Times, 6/12/08, “Emulate Japan to Cope with Oil Shocks”, written by Dilip Hiro, http://www.atimes.com/atimes/Japan/JF12Dh01.html) While the supply side remains static, the demand side shows no sign of tapering off. The main sources of new demand are China and India, which together make up two-fifths of the human race. To maintain their annual expansion rates of 8% to 11%, to lift tens of millions of Chinese and Indians out of poverty every year, they need ample sources of energy, and oil is a vital part of their energy basket as it has been in the developed world. An average American uses 34 times more petroleum than an Indian and 12 times more than a Chinese. Whereas India has established itself as a leader in software, half of Indian households still do not have electricity. Where electric power is available, outages are commonplace as demand often exceeds supply. While gasoline and diesel are required for buses and trucks as well as irrigation pumps, kerosene is a basic need for the Indian masses as a source of light and fuel for cooking. So the government finds it almost mandatory to subsidize petroleum products to protect the public from high prices in the international market. This is also the case in China. Little wonder then that these two mega-nations now account for three-fourths of the annual growth in demand for petroleum. Both China and India are on the threshold of a car revolution. At present there are only 10 cars for every 1,000 Indians, whereas there are 778 vehicles for every 1,000 Americans. To raise India to the level of a mere 100 automobiles per 1,000 Indians would require an immense jump in petroleum usage. Since supply is unlikely to rise appreciably in the near future, the stress must be laid on curtailing demand. That can only happen in the Western nations. As it is, in the face of soaring prices at gasoline stations, US demand fell by 3% during the first three months of this year. Economy LinkOil price spikes and scarcity threatens the Chinese economy as consumer needs and growing demand conflict with high prices and low availability (The New York Times, 11/9/07, “Rising Demand for Oil Provokes New Energy Crisis”, http://www.nytimes.com/2007/11/09/business/worldbusiness/09oil.html) More than any other country, China represents the scope of that challenge. As it turned into a global economic behemoth over the last decade, China also became a major energy user. Its economy has grown at a furious pace of about 10 percent a year since the 1990s, lifting nearly 300 million people out of poverty. But rapid industrialization has come at a price: oil demand has more than tripled since 1980, turning a country that was once self-sufficient into a net oil importer. India and China are home to about a third of humanity. People there are demanding access to electricity, cars, and consumer goods and can increasingly afford to compete with the West for access to resources. In doing so, the two Asian giants are profoundly transforming the world’s energy balance. Today, China consumes only a third as much oil as the United States, which burns a quarter of the world’s oil each day. By 2030, India and China together will import as much oil as the United States and Japan do today. While demand is growing fastest abroad, Americans’ appetite for big cars and large houses has pushed up oil demand steadily in this country, too. Europe has managed to rein in oil consumption through a combination of high gasoline taxes, small cars and efficient public transportation, but Americans have not. Oil consumption in the United States, where gasoline is far cheaper than in Europe, has jumped to 21 million barrels a day this year, from about 17 million barrels in the early 1990s. If the Chinese and Indians consumed as much oil for each person as Americans do, the world’s oil consumption would be more than 200 million barrels a day, instead of the 85 million barrels it is today. No expert regards that level of production as conceivable.
(The Age, 3/3/07, “Are the domino’s toppling”, http://www.theage.com.au/news/business/are-the-dominoes-toppling/2007/03/02/1172338883480.html&cid=0&ei=O_TyReDrG5LQqQOAjuGWCg) The last two days of the week's trading showed the market skittish, uncertain, wondering how to cope not only with the threat a bump in China could pose to Australian companies that rely on Chinese demand, but also with the fact that a bump in China could, for the first time, send world markets into panic. "It (the fall) and the world market's reaction to it is a reminder of the growing importance of China to the global economy and to the international financial system," said ANZ chief economist Saul Eslake. "If you had said 10 years ago that anything that happened in Chinese financial markets would reverberate around the world, people would have thought that laughable." Wednesday's fall focused investors' attention on one central question: "Is this the big one?" In light of that question, The Age has consulted brokers, economists and doomsayers from around the world to discuss the possibility of a great crash, how they think it would arrive and whether we are on its precipice. Paradoxically, the thing propping up the sharemarket is also the thing causing so much worry — there is so much money looking for a home. With all that money available for investment, it is difficult to imagine prices falling. However, all that money, coupled with habitual strong returns, means investors around the world are willing to give money to riskier and riskier ventures. The return, or "yield", for money lent to companies through buying corporate bonds is higher for companies considered more risky. However, the difference between low-grade or "speculative" bonds and "investment grade" bonds in the US has shrunk by about 75 per cent since 2003. This means investors are accepting smaller and smaller returns for riskier and riskier investments.
"Against the backdrop of people being worried about credit markets in the US, a stumble in China takes on much greater significance because credit markets in the US are tied to emerging markets," said Philippa Malmgren, a former adviser on equity markets to US President George Bush and a consultant to Deutsche Bank. Directory: file -> view view -> Western Europe after wwii view -> Author study: paul fleischman view -> Qpa1 7ela study Guide view -> Arctic Oil/Gas Neg view -> November 1970 Approximately 150,000-500,000 deaths Bhola Cyclone Bangladesh view -> Grade Level: 6 Unit of Study: Caribbean glce view -> Citation: Duffield, Katy view -> Table of Contents Lesson # view -> Chinese Wind Energy Disad Download 9.54 Mb. Share with your friends:
|