Great work Heading Out, in pulling these articles together. The articles are very interesting, both in what they say and how the contradictions between them may affect future Chinese oil use.

One of your articles says that Chinese oil use dropped by 1.8 million tons from 2004 to 2005. Yet the mine safety program seems to mandate the closing of thousands of unsafe mines -- for the very good reason that thousands of miners died in accidents at these mines.

Your articles also talk about ramping up Chinese oil use in the future. It would seem, on the face of it, that the trend in Chinese oil use is still upward sloping.

Many of those coal mines that are being closed in china are probabaly very small inefficient outfits that don't contribute much to the total production of coal.  I remeber fro ma year or two ago when china had another spate of accidents, they closed alot of small privately owned mines.  Many of these mines are like the old village industries of china.  They are helpful to small isolated areas, but overall, with an intergrated economy, they are a hindrance, producing low quality work slowly, and inefficiently.
I think China will be making huge leaps foward in energy efficiency in the next decade or so.  They need to do so for two reasons.  First, this is the only way they can continue to grow at anywhere near the current rate.  Second, they have enormous environmental problems right now.  Especially in Beijing.  THey are in the midst of have completged planting a "green belt".  A huge stand of trees outside the city to cut down on airborne dust and particualtes in the city.  I think over the next year and half until the Olympics, you are going to see a different Chinese government.  They are going to be much better behaved, especially towards the people.  They can't afford to have discontent and protests in the months and weeks leading up to the Olympics.  The world will be watching, as well as the entire country.

A minor point. Apparently the agreed upon price for NG to be shipped to Ukraine is at the tipping point for Ukraine steel and heavy industries, which are older ineffecient factories left over from the Soviet era. If the price was any higher, those old factories would be shutting down. It is still about 1/2 what the rest of the industrial world in the West pays.

Either Ukraine takes this pause (I think the agreement was for five years) and startes retooling or there will be a lot of unemployment in six.

The Machiavellians at Stratfor had the following to say about Bush's new interest in Energy

(sorry for the long quote, couldn't find a link for this since it was emailed to me)

Stratfor: Public Policy Intelligence Report - February 2, 2006

State of the Union: Exploiting Fissures in the Energy Security
Movement

By Bart Mongoven

After years of focusing on national security, democratization and the jihadist war, U.S. President George W. Bush gave emphasis to domestic issues in his State of the Union address Jan. 31. Of particular interest is his new focus on energy sources -- an issue that had threatened to upend many of his energy and environmental goals. On the floor of the Congress, Bush said the country has "a serious problem: America is addicted to oil, which is often imported from unstable parts of the world."

The sentiment certainly is not new. The basic argument is decades old, and since 2004, a growing coalition of foreign policy experts,
environmentalists and technology entrepreneurs have been warning specifically about the geopolitical effects of U.S. reliance on foreign oil. They advocate "energy independence" as a critical strategy for the United States. What is interesting about the State of
the Union speech is not so much that Bush would touch on this issue, but the way in which it was done: By adopting the goal of reducing reliance on foreign energy supplies, the president acknowledged the central argument of a growing coalition of interest groups that are
working against his energy programs -- yet without embracing their slate of proposed remedies. In this way, Bush appears poised to neutralize the potency of some opposition arguments and isolate certain components of the energy security coalition.

During the past three years, the idea of "energy security" has moved -- with relative swiftness -- from the outskirts of public policy debates to the center of U.S. energy discussions. Bush for some time turned a deaf ear to the issue; Vice President Dick Cheney in 2003 famously mocked the idea that federal advocacy of conservation was a
sound public policy. But by 2005, geopolitical concerns -- namely, continued political unrest in the Middle East and the leftward drift of South American governments -- record oil prices and, to a lesser extent, the emergence of concerns about climate change brought increasing attention to energy security from the mainstream media and from influential policymakers. With a few carefully worded paragraphs in a high-profile address, the Bush administration appears poised to enter the debate by at least taking up the challenge that has been
presented: reduced reliance on foreign energy.

The energy security movement is well-financed and has high-profile leadership. Former CIA Director R. James Woolsey leads at least two groups that are active on the issue: One of them, Securing America's Future Energy, was founded by the multibillion-dollar Hewlett Foundation. Another, Set America Free, has a board of directors that
includes conservative activist Gary Bauer and former National Security Adviser Robert C. McFarlane. Yet despite the participation of such political figures, most insiders tend to think of the energy security coalition as environmental at its core.

It actually has worked to the administration's advantage that the energy security issue was viewed as an environmental campaign relying on foreign policy arguments. The key vulnerability of the coalition
advocating energy security is that "being green" is not the antithesis of "continued use of imported oil." In other words, the more accustomed that voters got to seeing the concept of "conservation" wrapped up with energy "security," the easier it was in the end for
Bush to co-opt the movement by embracing security -- which closely ties in with his own foreign policy agenda. Now, it is up to the environmentalists to point out that energy security does not necessarily involve conservation.

In his national address, Bush said the answer to energy security concerns lies in technology. He neither called for increased domestic oil exploration -- a potentially touchy subject -- nor conservation. What he did say was largely unobjectionable to those who are naturally
predisposed to stand in his way on energy matters. It was a "Nixon going to China" moment, and the immediate reaction from Bush's most likely critics -- liberal activist groups, environmentalists -- has
been either silence or expressions of suspicion as to whether he is serious.

Based on the president's record, the path forward seems clear. The mention in the State of the Union address reflects a strategic decision by the administration to take on the issue of energy security -- it was not a one-time thing. The administration will continue to
talk about the strategic imperative of moving away from foreign oil and, at the end of the day, likely will call for some increased conservation. But the emphasis will be on expanded oil exploration in the United States, the implementation of clean coal technology, the encouragement of nuclear power and significant subsidies, and research grants for new energy technologies.

We do not expect that the administration will emphasize the environmental aspects of the issue, however, even when making moves that have been advocated by environmental groups. The remedies that environmentalists offer are generally ideas that the administration has rejected many times, such as increased fuel efficiency standards
for automobiles and mandatory renewable energy portfolio standards. The administration has rejected these ideas as bad for the economy, short-sighted and overly restrictive.

It would seem difficult to split the coalition of environmentalists and foreign policy activists in such a way, but there is a natural fissure between the groups that Bush likely will seize upon. The two major wings of the movement have different objectives. The
environmentalists in the coalition have embraced "energy security" as a tactic in the political battle for reduced oil consumption in the United States. Energy security is a means to an end for environmentalists. Set America Free, by all appearances, is dedicated to energy security as an end goal. This is a crucial difference.

Set America Free could be satisfied by an array of initiatives as long as they move the country toward security, but environmentalists have very specific goals within the security issue. This split points to a
significant pitfall that activists face when they endorse a strategic objective that does not reflect their actual goal. As much as advocates have tried to bridge the difference, it remains a non sequitur -- energy security does not necessarily require environmental
progress. The two camps are merely complementary, not joined. And this difference likely will not be lost on key Bush administration advisers.

The first step for the administration will be to embrace the language of Woolsey and Set America Free and essentially admit that the energy security coalition has won. The White House will have to embrace the
foreign policy arguments while paying lip service to conservation. The goal for the administration would be to make energy security a foreign policy imperative. This would strengthen the Set America Free side of the energy security coalition and widen the gulf between it and the environmentalists.

One example of how this strategy might work can be seen in last year's debates over oil exploration in the Arctic National Wildlife Refuge (ANWR) and Outer Continental Shelf (OCS). Throughout 2005, Set America Free was a forceful contributor to the debate over both the energy
bill and the McCain-Lieberman climate change bill. It worked closely with environmental organizations and took the lead at coordinated press events. Once those debates were over, however, the Senate began to discuss new exploration in the OCS and ANWR. Environmentalists fought strenuously but Set America Free was nowhere to be found.

Expanded drilling in ANWR and in the OCS would increase domestic U.S. energy supplies. While it is debatable how much such a move would decrease oil imports, expanded domestic exploration would work toward Set America Free's objectives. Yet these issues, especially ANWR drilling, are anathema to environmentalists.

If, at this point, the president makes serious offers to address the foreign policy hawks' arguments on energy independence, they likely will be drawn to support the solutions Bush offers. The key for the administration is to craft a message that appeals to the interests of Set America Free and pays lip service to environmentalist goals. It is clear from the State of the Union speech that the president saw a great opportunity to gain support of foreign policy hawks, while still promoting the interests of the oil and gas industries.

The real key to understanding the president's true intent is within his own wording: He wants independence from  foreign  oil, not oil in itself.

The neoconservative/environmentalist partnership was always a fragile affair, and pulling it apart would be perhaps no great feat. Bush's new energy policy, however, will widen another, more significant split that is emerging: that between moderate and radical environmentalists over the issues of clean coal and nuclear energy. Bush's recent pronouncements have created a moment of crisis for the environmentalist movement -- but as every strategist knows, crisis is as much a moment of opportunity as it is a potential tipping point
toward defeat. It is unclear at this time whether the environmental movement will manage to maintain its alliances and its internal coherence in a way that will allow it to capitalize on the spotlight Bush has placed on oil and oil independence.

Send questions or comments on this article to analysis@stratfor.com.

"the sudden increase in oil production from the Middle East."

Link should be?????:
http://realtimenews.slb.com/news/story.cfm?storyid=631220

I think they changed their top story.