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99 comments on DrumBeat: December 17, 2006

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SolarHouse on December 17, 2006 - 11:27am Permalink | Subthread | Comments top
China expected to import 140 mln tons of crude oil
BEIJING, Dec. 16 (Xinhua) -- China's crude oil imports are expected to reach 140 million tons in 2006, up 10.2 percent on last year, according to the Ministry of Commerce (MOC).

    Liang Shuhe, deputy director with the Foreign Trade Department of the MOC, said that China's demand for crude oil would total about 290 million tons this year, of which 48 percent were imports.

    According to Liang, China's total output of crude oil is expected to reach 183 million tons in 2006, with 7.40 million tons for exports.

    Liang said the fast growth of the economy has forced China to depend more and more on imports because of the limited domestic production, predicting that the steady increase in imports was likely to continue.

    Statistics from the MOC show that China's crude oil imports increased by 14.1 percent in the first ten months of this year to reach 120 million tons.

    The Chinese government removed tariffs on oil imports in November and opened its domestic oil market to foreign companies in December to cut the cost of oil imports.

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tstreet on December 17, 2006 - 11:48am Permalink | Subthread | Parent | Comments top
From whose hide will this oil come?  Haven't we just about bled the oil turnip from the poor countries?  At what point does this come out of the richer countries like the U.S.  Assuming we've already peaked, isn't this a good time to invest in oil futures?  
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Charles Mackay on December 17, 2006 - 1:22pm Permalink | Subthread | Parent | Comments top
With it's further considered that exports from both the two leading oil exporters (Russia and Saudi Arabia) are dropping, as well as continued demand growth from India and Far East countries, one wonders just how much poorer countries can offset China's huge oil demands.

The answer, I suspect, is when the book is closed on the 2006 year, we will find world oil and product inventories less than in 2005.  This will also be very true in the US - despite the strong contrary impression given by the media.  As of last week, 12/08/2006, US oil/product inventories were only 4 million barrels ahead of last year.

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Hothgor on December 18, 2006 - 12:55am Permalink | Subthread | Parent | Comments top
And that clearly explains how global oil inventories are near their all time highs.
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Charles Mackay on December 18, 2006 - 9:50am Permalink | Subthread | Parent | Comments top
The IEA reports a 41 million drop in world inventories in October - well before the typical seasonal winter fall.  In addition, the EIA has US inventories dropping significantly in November.

Next time I will only respond if you document your position first.

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Hothgor on December 18, 2006 - 1:40pm Permalink | Subthread | Parent | Comments top
Out of several billion barrels in inventory.  And that drop was precisely what OPEC wanted when they cut their production by 1.2 million bpd.  If anything though, it shows they only needed to cut production by about 600,000 bpd to bring the market into balance.
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Freddy Hutter on December 18, 2006 - 7:34pm Permalink | Subthread | Parent | Comments top
Charles forgot to mention the rest of the paragraph.  Nov 30th inventories were at 54 days vs 53 on that date last year.
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Hothgor on December 18, 2006 - 8:49pm Permalink | Subthread | Parent | Comments top
And just think, this is all in light of the fact that we apparently experienced dramatic reduction in exports around the world, as WT has been saying these last few months.  That or all the post peak production countries have had a miraculous turnaround this year! <chortle>
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Oil Watcher Named Ed on December 17, 2006 - 11:33pm Permalink | Subthread | Parent | Comments top
Wasn't it shown here that net exports from exporting nations are declining.
China can only import more if someone is losing the bidding wars.
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Dragonfly41 on December 18, 2006 - 12:52am Permalink | Subthread | Parent | Comments top
Or there is oil stored somewhere "off the books" that is being sold.
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Jack on December 18, 2006 - 2:34am Permalink | Subthread | Parent | Comments top
Is "losing the bidding wars" at all different from "conservation"?
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Rethin on December 18, 2006 - 2:42am Permalink | Subthread | Parent | Comments top
Except in Africa conservation means

  1. You are unable to run the generators at the hospital.
  2. You can't afford cooking fuel
  3. You can't afford gasoline to run your farm

etc etc

Soccer moms are using the fuel that poor African are "conserving"

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Jack on December 18, 2006 - 5:50am Permalink | Subthread | Parent | Comments top
My question was partially rhetorical and I don't disagree with you. I do think that we at TOD have a tendency to create these value-laden words, such as "bidding contest", which in my mind obscure, rather than clarify, meaning.

I also dislike the frequent comments here that say the solution is "conservation", without any thought or plan for what it entails.  In response, I have noted before that I think that price is by far the strongest driver for conservation. Legislative and voluntary conservation do suffer somewhat from Jevon's Paradox, which in the context of abundance weaken conservation as it just shifts demand to others.

So in this regard, true conservation is going to come from those most sensitive to price. I'm not saying it is good, just that it is.

I am not entirely convinced that the poorest will bear the brunt of "conservation" in volume terms, although it is likely to be the most painful for them.

Two countries in our part of the world, South Korea and Thailand have the most imported oil intensive economies in the world (oil imports to GDP approached 10%). I would expect that in economic terms, the overall populations of these countries will also be hit hard. Soccer moms, poor commuters, and others with the ability to reduce their oil consumption in the US and other rich countries will probably cut the highest volume, but may barely notice.

I do think my point remains true. That a "bidding contest" is the single most effective means through which conservation will occur.

I am not entirely convinced that the poorest will bear the brunt of "conservation" in volume terms, although it is likely to be the most painful for them.

Two countries in our part of the world, South Korea and Thailand have the most imported oil intensive economies in the world (oil imports to GDP approached 10%). I would expect that in economic terms, the overall populations of these countries will also be hit hard. Soccer moms, poor commuters, and others with the ability to reduce their oil consumption in the US and other rich countries will probably cut the highest volume, but may barely notice.

I do think my point remains true. That a "bidding contest" is the single most effective means through which conservation will occur. And there will be no large scale conservation without people paying more for fuel and gaining less of its benefits, especially the poor.

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jkissing on December 19, 2006 - 12:02pm Permalink | Subthread | Parent | Comments top
Jevon's paradox is not valid when a cartel will withhold poduciton when price declines.
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Jack on December 20, 2006 - 4:06am Permalink | Subthread | Parent | Comments top
I agree. I did say "in the context of abundance". It does not apply so well in the context of scarcity, delibrate or otherwise.
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