WSJ carried reports of India reducing gasoline subsidies by 3 rupees (6.8c US) per liter... 26c/ gallon, because the 3 big Indian oil companies can't afford the subsidies at old levels anymore. Under the old price levels the subsidies worked well if in an economically inefficienty way... because India makes private car ownership difficult. WIth subsisdized gasoline but demand from private cars limmited, lots of people (except the poorest) can afford the occasional ride in a 3-wheeler taxi (an "autorickshaw") when they need it. I wonder for how much longer.

Frankly, my fellow Americans have become fat, slothful, and in far too many cases blind (dare I say stupid?). I think the fact that oil companies are starting to put up advertisements about the "end of easy oil" is a major sign of eminent and rather drastic changes to come. While there may be a lot of "maximizing of profits" going on, it's capitalism at work in the majority of cases. In the long run what will happen will probably be good for the world. I don't know how pleasant it will be to live through, however.

We already have some pretty technologies available to us like wind, solar, hydro, and nuclear power. No it won't allow us to maintain the same lifestyle we're use to chasing, but I'm not sure that's a bad thing. The American dream has been perverted so much that most people aren't happy with it anyhow.

So, what the article suggests is that we'll see more and more countries get priced out of the market until the most powerful countries are forced to make some hard decisions. I can't help but wonder if all of our bases in the middle east and asia have a lot to do with that. I hope not, because I don't think it's a winning strategy. We can only fight or protect so many areas of the world at once... as the Iraqi's and Afghani's have reminded us.

Oil will peak at USD 90 per barrel in March 2006 - CNOOC Dep. Chief Economist

By Erik Dahl

BEIJING.  September 6. INTERFAX-CHINA - Oil will peak at USD 90 per barrel by March of next year, CNOOC Dep. Chief Economist Zhang Weiping said at conference discussing China's energy needs in Beijing on Monday. Zhang also expected global oil production to peak at 94-100 mb/day during the next five years.

"High oil prices will have adverse affects on China's economy," said Zhang.

China's expenditure on oil imports could reach or even exceed USD 60 bln on oil imports this year, up from USD 40 bln in 2004, putting "high pressure" on China, said Xia Yishan, Senior Research Fellow at the China Institute of International Studies.

China's annual crude demand is expected to rise by 9.7% this year, suggesting that the country will need to import 135 mln tons this year, accounting for 42.45% of total demand and exceeding last year's figure of 40.5%, said a recent report by the Development Research Center under the State Council.

The country's net oil imports stood at 120 mln tons in 2004.

China is facing oil shortages on the eastern coast, especially in Guangdong province. Crude processing for export purposes has already been suspended until December 31, as part of the efforts to guarantee domestic supply.

Growth of energy demand in China has outstripped GDP growth since 2003 and will face sustained energy shortages if this continues, said Zhou Dadi, Director General of the Energy Research Institute at the conference.

Energy has been put under pressure from both rapidly increasing demand and dismally low efficiency.

For each unit of GDP, China uses three times more energy than the United States and five times more than Germany and Japan. This is due to a lack of economies of scale, an over reliance on high-energy industry and outdated production technology, according to Dr. Bernhard Hartmann, a Vice President at AT Kearney.

Comparing industrial processes, energy consumption per unit of output is between 20% to 100% more than similar practices in other countries, according to David Dollar, the World Bank's Country Director for China.

Industrial production is much more energy intensive than service industries and 52% of China's GDP comes from industry, compared to an average of 36% for other middle-income countries, according to the World Bank.

Residential heating requires 50-100% more energy than OECD countries due energy efficiency standards, according to the World Bank.

Over the next 15 years, an estimated 300 -350 mln people are going to move to cities. Urban residents consume 3.5 times more energy than rural residents, said Zhao Jie, from the China Academy of Urban Planning and Design.

"High oil prices are prompting us to develop new energy conservation measures," said Xia. Saving one ton of oil is only 1/5 the cost of producing one ton of oil.

China has already committed to increase renewable energy consumption to 10% of the nation's total energy consumption by 2020.

China has already set the price of wind power at 40-60% above the price of other energy sources to encourage development, however, renewable energy is still in the initial stage and the technology is still "weak" said Zhou.