45 comments on Wildcats & Tigers: China's Oil Acquisition Strategy
Comments can no longer be added to this story.
The contents below are paid advertisements. Their appearance does not imply an endorsement by The Oil Drum.
“I'd put my money on solar energy… I hope we don't have to wait til oil and coal run out before we tackle that.”
—Thomas Edison, in conversation with Henry Ford and Harvey Firestone, March 1931
Search The Oil Drum with Google
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
Personnel
- Editors: Prof. Goose, Heading Out, Stuart Staniford, Nate Hagens
- DrumBeat Editor: Leanan
- Contributors: ace, Engineer-Poet, Gail the Actuary, jeffvail, JoulesBurn, Khebab, Robert Rapier
- TOD:Local: Glenn
- TOD:Europe: Chris Vernon, Euan Mearns, Francois Cellier, Jerome a Paris, Luís de Sousa, Rembrandt, Rune Likvern, Ugo Bardi
- TOD:Canada: benk, Libelle
- TOD:ANZ: Big Gav, Phil Hart, aeldric
- Technician: Super G
Recently on TOD:World
TOD:Local
- Summer Streets a Success!
- Plan for Hydro-Fracture Drilling for Unconventional Natural Gas in Upstate New York
- Enjoying Life Close to Home: Fun Streets
TOD:Europe
- Freddie Mac/Fannie Mae bailout: Guess Who Wins
- UK Energy Flow Chart 2007
- Brown pretends to be tough on Russia
TOD:Canada
- Compressed Air Energy Storage - How viable is it?
- Oil Megaproject Update (July 2008)
- Weekend Energy Listening: Wind Power with Paul Gipe
TOD:ANZ
Peak Oil Primers
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- From the Wilderness
- Life After the Oil Crash
- Peak Oil Crisis
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Matthew Simmons
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- EcoGeek
- Eco Street
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- The Big Picture
- Casaubon's Book
- Cleantech Blog
- Clusterf
k Nation (Jim Kunstler) - The Cost of Energy
- Ecological Economics
- David Strahan
- Econbrowser
- The Energy Blog
- Entropy Production
- Environmental Economics
- European Tribune
- GraphOilology
- jeffvail.net
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
- Mobjectivist
- Peak Energy (Australia)
- Peak Energy (USA)
- R-Squared
- Resource Insights
Organizations
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
Oil is, today, a fungible commodity. The notion of a dawning mercantilism suggests that its fungibility may be short-lived. The whole point of gaining an equity stake--as with the other current trend toward long-term, bilateral supply contracts--is to remove your supply chain from the uncertainties of a global marketplace. Fungibility defines what is on the market, but to a far lesser extent supplies that are locked down into equity stakes or long-term contracts.
Remember, in a market environment, the value to a buyer of an essential commodity is not just in the average price (lower is better), but also in reducing variance (lower is better) of this price.
Classic option theory.
Consider a parallel situation with electricity demand. It's even worse than oil since it can't be stored at all (as opposed to having capacity to store a very small fraction of yearly consumption).
If alot needs to be purchased on the spot market then the variance will be very high and the consumer is subject to intermitted insane spikes which will hurt them economically.
China is interested in reducing the variance of its costs, not just optimizing the mean.