Chinese demand growth continues (for oil and everything else too...)

As we look at the world market for fuels, one of the major growth areas in demand continues to be China. And, given their considerable potential impact on which product goes where and from what resource, in the future, it is interesting to put a few news items together and see where the wind is blowing.

One could start by noting that China's economy has been growing at 10.7% this year about 2.7% above the initial target of 8%, a number that has also been set as the official rate for next year, at this point. And while there are some publicity stunts, such as trying to stop private cars driving for a day, that will both highlight the current reported consumption of 8.7 mbd by those cars, it will also highlight the benefits of public transportation, one can assume that the current trend of higher than official growth rates may well continue. However even though the power generation system is currently hurting due to a drought that has lowered water levels, newly built coal and natural gas plants should cover the shortage.

China's seasonal hydropower output has been falling since August as dry weather shrinks reservoirs, but two years of rapidly rising coal- and gas-fired power generation should prevent another surge in oil demand.

Power generation from hydropower plants -- which can produce up to a quarter of China's electricity -- fell 10.3 percent on year in October, raising the burden on other plants to meet China's 10-plus percent growth in electricity demand.

Output was down by 8 percent and 4 percent, respectively, in the preceding two months, as water reserves shrank and the southwest was crippled by a drought that state media said was the worst in over a century.

In their move to build a Strategic Petroleum Reserve, China has also been exceeding anticipated purchases this past month.
Of the total, 2.5 million barrels on two tankers were Oman crude, and one tanker of about 1.9 million barrels each came from Yemen, Russia and Kuwait, one source said. Crude traders had speculated that some of the additional barrels could be from Oman after top refiner Sinopec, the largest single buyer of Omani crude, was seen lifting around eight million barrels of the grade for November loading, more than its usual four to six million.

It was unclear whether the move was part of Beijing's long-term energy strategy to provide an emergency buffer amid rising imports or a commercial move by Sinopec, which has leased 10 million barrels of capacity for its own use as the government debates policy.

Certainly if prices are lower, and the Chinese need to grow their SPR, this would be a good time to grab that opportunity. Though there are other opportunities they are also taking advantage of.

Rosneft, the Russian oil company is now apparently going to invest heavily in China.

Russia's state-run oil giant Rosneft is to build hundreds of petrol stations in China as part of a plan to double its business in Asia.

The scheme is part of a joint venture between Rosneft and China National Petroleum Corporation (CNPC). Rosneft plans to build a joint refinery in China with CNPC. Also as part of the deal, CNPC will extract crude oil from Russia's Eastern oil fields, and Rosneft will increase its crude exports to China.

Speaking at the opening ceremony for the Rosneft Asia Pacific office in Beijing, chief executive Sergei Bogdanchikov said his company would increase the amount of oil it sells to China by around 7 million tonnes to 20 million in 2007. Russia is seeking to diversify its energy exports away from Europe and is already building two gas pipelines to China.

Supplies through the current pipeline from Kazakhstan will be raised by a million metric tons, and in addition the Chinese can expect more supplies from Sakhalin Island. In addition the Chinese have arranged to receive natural gas from Iran
"According to the agreement, 3m tonnes of LNG will be exported (annually) by Pars LNG project for a 25-year period to the Chinese market starting early 2011," NIGEC official Majid Zamani was quoted as saying.

The Pars LNG project, which teams up the National Iranian Oil Company, French Total and Malaysian Petronas, is one of three consortia in Iran producing LNG.

Phase 11 of Iran's offshore South Pars gas field, which is still to be finalised, is slated to feed the LNG production facilities of the project.

and is now talking with OPEC about more formal relations, particularly to remove Chinese dependence on oil from the "hot spots" of the world. Chinese demand for natural gas is anticipated to grow so that they will need to import an equivalent amount to the Iranian supply from Malaysia. One wonders, as they look at larger quantities of foreign imports, if they will also start looking at having it shipped in solid form.

The Chinese are also making moves to open more of their markets to foreign firms, although the restrictions that they are apparently putting on those interested may limit the opportunity more than a little.

Those seeking permits must have refining capacity, an import business or wholesale supplies, the ministry said in guidelines published on its Web site (

They must also have at least 10,000 cubic meters of storage capacity, and access to pipelines, dedicated rail lines, docks or specially equipped vehicles for transport.

Total, however, plans on being one of the players.

Looks as though there is a lot going on over there.

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Exponential Rates of Change

I have previously commented on the top two oil importers--the US and China--versus the top two oil exporters--KSA and Russia.

First, all four regions are showing exponential increase in domestic consumption--KSA and Russia a year over year increase of 13% from 2004 to 2005, with no signs of any decrease on the horizon.

Regarding production, the US and KSA are currently showing production declines.  China and Russia are both basically flat, to slightly up.  I predict that both China and Russia will soon start showing production declines.

In any case, at this point in time, 12/06, what the top two importers want to import is increasing exponentially, while what the top two exporters are jointly exporting is declining exponentially.  I estimate that the combined exports from KSA and Russia cannot currently meet the combined demand from the US and China.

The bidding wars have commenced.  As Deffeyes said, let's hope the bidding wars are fought with currencies and not with nukes.

At some point I am beginning to wonder, though... one can not have flat production and all these increases in Chinese demand and not have conflicting numbers beyond the range of error bars. So how big, exactly, are those error bars and when are we going to either see a re-alignment of the data based on the evidence OR a correction of either production and/or consumption numbers?

My only other explanation would be that while China is using more SOMEONE else has to be using less. Which countries are SOMEONE?

Which countries are SOMEONE?

The poorest countries first, in areas like Africa, (and the poorer people in richer countries) then the demand destruction will move "Up the food-chain."

Do we have any statistics on this, or is it just anecdotal?
Leanan has posted several stories regarding the problems in poorer countries due to energy supply and pricing issues.

But in any case, world production and exports are clearly going down.  We can argue why, but the production and exports are falling as the mathematical HL models predicted.  So, someone is conserving.  

Our problem here in the states is that our demand for imports is going up for two reasons:  falling production and increasing demand.  For our  import demand to stay constant, our demand, in terms of barrels per day, has to fall at the same rate that our production is falling.

An excellent TOD article would be for someone to document the incidence and spread of demand destruction in the poorest countries/social classes, to help us get beyond the current scattershot glimpses of energy-induced social stress in these geographic areas and social spaces.  This would be especially helpful in the current "debate" between WT and RR.
Hello LoveOregon,

I hope they include that as blackouts, less water-pumping, declining transport infrastructure of all kinds,  and other undesired effects mount: that water & food shortages will directly determine the resulting violence levels.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

Hello LO - this is the best I've seen so far that has the worrying trend of haves and have nots in the data. I've been thinking of a post on this, but a cursory look so far does not show significant trends yet. A lot of the very poor countries consume so little oil - I don't think they are even recorded. The chart is from the. Norwegian energy crisis blog

It's a good chart, we can see clearly that the price increase since 2001 is well correlated with the growth in the Chinese imports.
Yes, but good correlation alone does not prove cause and effect. The rise in oil price could be due to something else entirely...
I covered this issue at some length in Consumption Winners and Losers.  The key graph is probably this one:

Top countries by percentage decline in oil usage 2004-2005.  Source BP Statistical Review of World Energy 2006.

I agree with Westexas on this point - a look at last years bp stat review (2006) shows that India actually consumed less oil last year (2005) and I think a continuation of this trend throughout the developing world could become very messy.  I see four main groups:

Oil exporters - perhaps the strongest group
The rest

And the pain and trouble is likley to start in "the rest" - big Asian countries like India, Indonesia and Pakistan, Latin American countries, FSU republics - Ukraine and Belarus, and Africa - IMO.  Could start with gas this winter - if its cold.

It looks like 2005 was the Peak Export year.  Even if, by some miracle, production increases in the exporting group as whole, their domestic consumption is increasing so fast that I don't seem them showing increasing exports.
IMHO, the USA is next up the food chain.  

The US has a MASSIVE balance of trade deficit, high oil use/capita with a low "price elasticity of demand" (absent recession/depression).

Japan, China, India and the EU can export enough to oil exporters to pay for what they need/want.  (In the case of India, ~1 million workers). Most of those nations listed can cut back on oil consumption fairly easily w/o major social & economic disruptions.  To varying degreees, they all have leadership that recognizes the problem and are taking inadequate steps to prepare. (Better to take 1/4th, 1/3rd or 1/2 the needed infrastructure, etc. steps today than none at all, see GWB).

None of the above is true for the US.

The suffering will NOT be spread evenly, and the US seems near the front of the queue to me.

Best Hopes for the next US President,


The us must, by definition, run a massive deficit if other importers are to have the dollars required to fund their oil and other commodity imports, following which the exporters cycle their surplus dollars back to the us for bond and other investments.  The us is, in effect, the world fed reserve that provides the liquidity required to finance world trade.  A nice role for us because, as a by-product, the world ships us goods and services in grateful thanks for our service.
the US economy is so extremely wasteful when it comes to energy that we could save a million barrels per day without really noticing...
We seemed to notice a less than 1 million/day reduction immediately after Katrina & Rita.

The US has a low, not a high, price elasticity of demand :-((

So even 250,000 b/day short term reductions take major changes in "behavior".

Best Hopes for a high long term price elasticity of demand for EVERYONE, (It's a good thing)


From a geopolitical perspective, I believe the US is ripe to be "Suezed" ( a verb I coined after reading westexas' reminder that the combination of threatened oil production cutbacks and US dumping of British debt to crash the pound were key parts of the US strategy to force the British to abandon the Suez Canal in 1956. Collusion between China and Iran, or China and KSA, or worse, China, Iran, and KSA, could force the US to its knees unless we were willing to go nuclear. And I don't think anyone wants that or even believes we would do that.
Bullshit. You need to read that history for yourself. You know nothing about Suez. You just proved it. C'mon, man, do us a favor. You are intersested in this case. So I suggest you read something about it. You meant me to give you some leads?

Westexas is a good guy, but you'll get much better historical references from me. And you can work your way off both. Make up your own mind...

In fact, you're gonna have to follow my leads to prove non-partisan. Gotcha. Trust me, you'll like it.

1956 was a great year.


Even SendOilPlease and AngryChimp will like this. This is why Oil CEO still has friends.[roll soundtrack now]


09:55 07Dec2006 RTRS-Japan Nov oil data suggest 6 pct drop in demand

    TOKYO, Dec 7 (Reuters) - Japanese oil demand likely resumed this year's falling streak in November, dropping about 6 percent from a year ago as the winter got off to a mild start, Reuters calculations based on industry data show.

    Oil product deliveries in the world's third-largest consumer over the four weeks to Dec. 2 fell 5.7 percent from a year earlier to 14.26 million kilolitres (89.7 million barrels), according to calculations based on fuel production, imports, exports and stock data from the Petroleum Association of Japan (PAJ).

    The calculations, which exclude naphtha as no weekly data was available from last year, mimic those made by the U.S. Department of Energy to estimate domestic consumption.

    Official data from the Ministry of Economy, Trade and Industry (METI) will be released on Dec. 28.
    The data suggest that the slump in demand this year continued into November, weighing on Asian distillate markets that have been under pressure from high Japanese winter kerosene stocks.

    Oil demand rose by 0.9 percent in October, the first increase in six months, thanks to a pick-up in gasoline demand after pump prices fell sharply from record highs.

    But overall this year has been marked by significantly weaker fuel demand, including a drop in September to the lowest monthly sales since September 1991.

    Reuters calculations showed that kerosene sales dropped by 3.2 percent over the past four weeks to 2.5 million kl (about 560,000 barrels per day) due to mild weather that limited homeowners demand for the heating fuel.

    In October sales slumped 6.8 percent to 1.27 million kl (258,000 bpd), the lowest level for any October since 1972 as mild conditions limited use by homeowners, according to METI.

    The calculations also showed that sales of gasoline, which make up about a fifth of fuel use, fell 1.8 percent in the four weeks from a year earlier to 4.45 million kl (1 million bpd).

    The decline would be a reversal from a 4.4 percent year-on-year rise in October.
    The data also suggested an 8.4 percent fall in crude imports.
 ((Reporting by Osamu Tsukimori; Reuters Messaging:; +81-3-3432-7391))

Note that Japan's population is aging and shrinking fairly rapidly, which of course affects consumption. Same is true for Germany, Italy etc.
I've lived in and around Tokyo for ~5 years without a car. I would observe that a car is basically a luxury. In general, it's not necessary for life here, and is a waste of time for most commuters... that's not to say that the roads aren't packed, but the weekends always seem worse.

My suspicion is that Japan can reduce the amount of oil that it uses rather quickly, and with minimal affect on society.

I'm in Tokyo right now.

Yeah, the roads are packed on the weekends, but that doesn't mean a lot of people are driving. Tokyo's road network has a terribly small capacity, it doesn't take much to pack them full of traffic.

I don't think Japan can reduce its oil usage much at all. There is basically no wastage.

Inside Tokyo people rarely use their car (I hardly use mine). Outside of The major cities demand is very inelastic. If you don't drive you can't go anywhere.

Almost all cars are tiny little fuel efficient things. Heck the mini looks big around here.

You could save some fuel by reducing non essential driving, but there isn't that much to cut.

We could cut 25% overnight. We could cut an additional 25% inside of 30 days. We are the most dynamic society that has ever graced God's earth. Who the fuck are you kidding?
What's this "we" crap? You live in Japan now?

Do you know how much oil I use a day? Round about zero barrels.

Don't drive. Home isn't heated. Water heated by NG. Electrcity come mainly from Nuke and NG and I use a small fraction you use a day.

So how the heck are "we" going to cut our oil usage by 25%?

I was talking about US usage.

I know exactly how much you use.

Stop fucking around.

Respond, Rethin. You can work this. not well. But I can try to make this look good. Try. Serious.
I really only meant that the usage is currently largely discretionary, and the infrastructure is largely in place to abolish moving things by truck. There is quite a bit of that still going on - try getting out of Tokyo on when of the days when the roads are cheaper for trucking.

Don't think geothermal is fully exploited, and the lack of a national grid makes it difficult to tap the wind power potential of places like tohoku / hokkaido.

These seem like minor changes to the Japan energy mix compared to the horror that american society faces.

Good to see some more discussion of japan here.

I really only meant that the usage is currently largely discretionary

Maybe you have some numbers on this, but my thinking was driving was mostly non-discretionary. If you are outside the major cities you have to drive to get around. If you are in the cities you take the train. Heck, even the taxis are LNG.
I suppose there is some discretionary driving on the weekends, up to the ski slopes and what not, but it can't be that much.

As to rail, isn't almost all freight moved by electrified rail already? Except for the last mile. And they even outlawed truck idling for deliveries.

try getting out of Tokyo on when of the days when the roads are cheaper for trucking
Couldn't tell you. I almost never drive. Tried driving last weekend and instantly regretted it. yuck.

BTW where are you at? I'm in Kanagawa.

Regular 007 aren't you?
No, i don't have numbers - i'm going on instinct :) I rarely drive (not having a car limits that...) but did spend a few months commuting out to hachioji a few years ago. There are days when there are huge numbers of trucks on the expressways. As it was explained to me, there are days when the tolls are lowers... only once or twice a month.

I'll spent sometime looking for non-discretionary / discretionary numbers, but it'll be painful.

Also in kanagawa-ken, denentoshi line.

Not sure how long I can keep from laughing. Engage sniper teams on my signal. Wait?! Whoever said anything about nuclear material? 90 seconds to target. Do not engage. Look. We need more information. You went over my head. Do you have a visual? 1-9-Zero. Roger. 15 seconds. Negative. Target is no longer a threat. Paranoia. Wheels up and clear. Safely.

Noone is getting the sack!


Yeah, me too.


The French tipped us off. Which is weird. Cuz the French never do us any favors.

(How do you spell wierd?)

This is a shocker of an excercise.

Theoretical weak link.

Tell the Libyans track 5 'Mein' Deftones latest.

So here's my question...

Thank you for your concern.

Me neither.

Bad move.

'The Idiot'

What do you know that I don't

I dunno

Let them drop some oneliners

They can't

They are not poets but they wish they were

yes but they wish they were aggh they are lazy that is how we fish them out

they cant complete lines they are fucktards

watch this

see what I say

neither smekhovo nor hagens could possibly sneak in

this is impervious barbed wire

I'll show you why shortly

You can't. We developed this method.

I'll spent sometime looking for non-discretionary / discretionary numbers, but it'll be painful.

Don't worry about it. Only the two of us care, if that many.

BTW I'm on the Odakyu sen.

I'm torn on Japan. I can't decide if its the best place to be in the event of a crash or one of the worst.

The economy is tied to producing consumer goods (my job certainly is) and in a depression will take a huge hit. Not to mention the huge energy imports.

Yet we have so much electrified rail, and most of the food is produced in Japan.

My life boat is in the States. I just wonder if abandoning Japan for the US is a good idea or bad.

Man, I really hate PO :-(

Sorry, maybe some other time. You're improving. I'll give you that.
Another possible explanation: I read that the Japanese are getting big into energy efficiency in their housing, and use lots of alternative energy too (particularly PVs). As this movement gains momentum, demand for oil will naturally fall (I am assuming that currently oil is used for heating directly or via electricity generated in oil fired power stations). This is a model we should be emulating here in North America (California excepted), but are simply not bothering to...though we might be forced to soon :-)
Actually most Japanese home are not centrally heated. Rooms are heated with kerosene space heaters (sometimes electric).

You can't get much more energy efficient than that.

The big thing now is to build a new house that has insulation! Up till recently homes have had 0 insulation. I live in a realativly new apartment building (15 years old) and I can feel the wind blow through my walls in spots! And no, its not a slum, that's just how they build them here.

One thing I don't know and really would like to know is how we get our electricity. Is it nuke, oil or LNG?

But since Japanese homes used tiny amounts of electricity (you should see the size of my fridge!) you can't save much oil here even if the elec plants were oil fired.

As to PV's, if they are popular they are hard to see. I don't see them around much at all.

We're down to ~160KWh a month for a good nine months of the year - not much more to cut there. We tend to live with the cold until January... and use a heated pad under the carpet in the evenings. has numbers on power generation.

Out in the suburbs there are quite a few house with PV. And i see new houses with solar water heaters and PV.

Great site.

Too bad they don't break elec production down past "conventional thermal." I wonder how much of that is NG and how much of that is oil.

I was shocked at the coal numbers.

But this really got me
Japan is presently the world's fourth-greatest energy consumer

Where the heck does all the energy go?

Breakdown of the numbers:

I'd guess a lot of that energy is used to being the second largest economy in the world. And you only have to look around tokyo at night, or feel the summer/winter air conditioning in offices, etc. to get some idea of what might be being used.

Also, i don't think it's safe to extrapolate based energy usage for a country based on the personal experiences of a couple of gaijin in tokyo ;-)

Great link thanks!

And you only have to look around tokyo at night, or feel the summer/winter air conditioning in offices, etc. to get some idea of what might be being used.
I don't know about your office but mine buys into that cool biz crap. Hot as nuts in the summer and cold in the winter.
And as for the night lights, Shinjuku, shibuya and ginza are relativly small areas.  Ever been up Tokyo tower? Most of the city is dark at night except for a few bright spots. And all those lights are fluresant anyway.

I'd guess a lot of that energy is used to being the second largest economy in the world
Yeah. I should break it down by captia. Still can't believe Japan uses than much energy. crazy. Really brings home the idea that modern lifestyle is completly unsustainable. Japanese are misers compared to Americans when it comes to energy usage, and yet still use so much. Makes you wonder what really is sustainable. Guess we'll find out in soon enough.

Also, i don't think it's safe to extrapolate based energy usage for a country based on the personal experiences of a couple of gaijin in tokyo ;-)
Yeah, you're proberbly right.

Refridgerator size has little to do with consumption.  At Sear , most efficient 18.8 cu ft model used 387 kWh/year.  the most efficient 4.4 cu ft model used 303 kWh/yr (from memory when shopping recently) and 10 cu ft model used 400+ kWh/yr.

Best Hopes for Appliance efficiency :-)


I am expecting a change in market/price dynamics sometime soon, within six months or so. I am reminded of the natural gas market a little over a year ago. At that time after the hurricanes took gas production off line there were calls that with production down we were in big trouble. But others pointed out the inventory levels were high and speculation was out of hand. Well this dichotomy of thought apparently was resolved by industy deciding to "cut and run" to regions of cheaper gas, and a reasonably mild winter. One can argue how bad this was, lost jobs and all. But, this seems to be the dynamic for the near term, that is flat to declining production offset by reloctating industry amidst relatively high prices, and affected by the severity of the winter. The near term being until nat gas production starts to drop more severely.

Now I understand the oil market dynamics are different, being a global market and all. But we do seem to be heading to a juncture where the dynamics will have to resolve the apparent discrepancies. We'll have to either get a rise in production or some kind of demand destruction through a global economic slowdown. Or of course a combination of both. But something has to give soon, or as you mentioned the two different viewpoints will be outside the error bars.


Thanks everyone! The answers were very helpful. I am glad I asked.

And I hope the article containing a quantitative analysis of this trend will be written soon! I am looking forward to it.

all four regions are showing exponential increase in domestic consumption

According to EIA, US domestic oil consumption growth was slightly negative last year, though it is rebounding this year.

Where does oil demand from US military bases/operations overseas show in the data?
Here is a good article on US military oil consumption by Dr. Sohbet Karbuz a former head of non-OECD energy statistics section of the International Energy Agency (Paris).

In my opinion there are three major intial points of demand destruction.

1.) Poor Countries.
2.) General Economic slow down or recession.
3.) Low grade products of the oil industry bunker fuel/Asphalt/fuel oil for generators.

All of these can be looked at to discern trends in oil usage.
The key factor will in my opinion real shortages of oil or oil based products.

We are seeing shortages/demand destruction in both poor countries and worldwide for asphalt. The bunker fuel market is very very tight with any hiccup resulting in shortages.

Comments by Joe Dancy at   

China's oil imports in September of 2006 were 24% more than  September 2005, and 2.4% more than the previous record set in  the middle of January. As recently as 1992  China  was self-sufficient in oil. Today the country imports 40% of  its needs, and imports continue to increase each year. 

China  has begun to fill its new strategic petroleum reserve - the  first time the country has established such a reserve. While  details as to the fill rate and capacities are not disclosed,  the size of the strategic reserves are intended to provide for  120 days of demand should oil supplies be interrupted. 

China  will pass  Japan  as the world's second-largest vehicle market this year. Carmakers  in  China  sold 5.76 million units this year through October, an increase  of 25.6% from a year earlier. Both production and sales for  2006 are expected to top seven million units, which would set  a new record and would exceed last year's production by over  a million autos.

Daqing,  the largest oilfield in  China, is in decline.  China  depends on this field for one-quarter of its oil production.  In 2010 it is projected the field will produce 780,000 barrels  per day, down from 1.1 million barrels per day in 1997. New  discoveries in  China  are not keeping pace with the skyrocketing demand for oil and  oil products.

The  chief executive of Mexico state oil monopoly Pemex last month  said production at its Cantarell oil field - one of the top  three producing fields in the world - will decline by an  average of 14 percent a year starting next year. The average  annual decline will be equivalent to about 150,000 barrels a  day.  Cantarell, Mexico's largest source of crude oil, began declining from producing  a record 2.1 million barrels a day in 2004 to roughly 1.8  million barrels a day this year.

A few Saturdays ago I spent the morning watching five episodes on the Discovery Times Channel about China. What really struck me was seeing all the 'common' people they interviewed and how they worked and lived. One could almost not tell if they were in China or the US. The inside of the homes and offices were all packed with nice 'stuff'. The homes and offices could just as easily been here in the US. Of course most of these people were the middle class and there are billions in poverty, but the point that really struck me was how there were all these billions of people wanting and striving to live a lifestyle like we do here in the US. From a resources stand point that realization shocked me. That is a huge amount of oil, steel, et, etc, needed.
Your cable network likely only showed you what was desired to be shown, by TPTB.

All my first hand interactions wtih mainland Chinese, including a former girlfriend, lead me to believe that any portrayal of lifestyles of common Chinese being similar to the average American are just wrong.

Given the population of China, it would be easy to find 10 or 20 million Chinese who indeed live (materially) in a fashion with which Americans could identify, but that would only be 1 or 2% of the entire Chinese population!

There is a real disconnect between perceptions (by North Americans) of what the East is like, and the reality on the ground.    Even the average Japanese, South Korean, or Taiwanese live physically more modest lives than the average citizen of the US or Canada.


Thank you for the response. I guess my point was that the show made the titles about growth in China a little more understood. I agree with you that I probably have no real understanding of the 'norm' in China nor will I short of traveling there. But even if 1-5% do live as we do or are trying to live as we do, it still equals a large number and a large requirement for resources.

You hit on one of the hardest concepts to get our minds around - how even a small percentage of the Chinese population, desiring and working to achieve a western-influenced lifestyle, is still large in number compared to the average nation, and will have large impact on the global commodities market.  

Even if only 1 out of 10 Chinese ever own material possessions equivalent to the average Arkansas trailer-park tenant, that is the equivalent of 130 million beat up Ford pickups with 130 million add-on CD players playing 130 million copies of Elvis' Blue Hawaii CD.  The other 9 out of 10 are still riding bicycles (if lucky, else they walk) and living in huts.   And those 9 will want what the other 1 has.   OK, I've stereotyped and hyperboled, but that 10% figure is about right when we are talking about the percentage of people who are "making it" so to speak.

The numbers don't lend themselves well to the easy-to-intuit problem solving methods that so often are found in mass market publications or politician's statements.   There is no easy answer to the masses of Asia who would like to modernize their lives, and by modernize I mean such basics your own (private) shower and bathroom, medicines that Westerners take for granted, any type of computation device, and of course a powered means of transportion  (automobile.)

I live in Japan - it is a fairly modern society (materially anyway.)  Yet even in my very average neighborhood there are many families living in 4 room flats, many people who don't own automobiles, and very many single individuals who live in apartments of approximately 15 square meters in size.  It is a very modest but workable lifestyle.

Even if the goal was to bring every Chinese and Indian's living arrangements only to the modest Japanese space/building standards, that would likely consume all the world's construction material for many years (I've not done the calculations but I bet it is true.)   And to maintain and enable that lifestyle would require energy supplies far exceeding what is available.

I doubt any North American (US, Canada), who hasn't travelled, really could get a feel for the difference, and probably doesn't appreciate how great the change was wrought by the industrial revolution in their own country.

I don't think the 9 Chinese want beat up Ford pickups... I would rather suspect they dream about a BMW or a Benz. And they will probably settle for a small Japanese or Korean car. Which sort of cuts the consumption problem in half or even a third. Still... it is a huge problem.

But as far as we can tell what will keep the Chinese from living the dream anytime soon is public health. As it is their power plants and industrial facilities are poisoning them. They won't be able to add cars to that mix unless they are willing to reduce their life expectancy by a very serious amount. And since long life is one of the most desirable features for the Chinese, there might be hope.

I don't know of any case where pollution actually led to a decrease in life expectancy. The greatest decline in life expectancy (ex-USSR) coincided with a large decline in industrial pollution.
And Mercedes has already started production in China! see here

Mercedes sedans to be built in Beijing

and that is dated in summer of 2005. with 64,000 vehicles sold in 2004.

I think that portraits of the US are often misleading as well. Many shows show Bel Air and upper middle class to lower upper class living. Trailer park and "project" reality can only be seen on "Cops" (for effect) and I have not often seen a show on tv portraying the life of the farmer in the Midwest. There are huge differences between offices in different industries. I know people who work in shiny glass palaces while my own workplace is much more down to Earth.

What counts is that the distribution in China is very skewed and while it unwinds to a more equal status, the average will go up a lot. We will probably see the opposite in the US, where the scissors are opening and the general trend seems to have been down for many people and up for far fewer. But I might be wrong about that.

Japan, Europe etc. are in my own view (with practical experience only with Europe) more cases of "doing more with less". One can only imagine what the US COULD DO if it were as well structured as those countries. It might never come to that... instead all the possible gains will have to be used to prevent us from slipping.

I don't know what it is with americans to think that everybody  else wants to "live a lifestyle the way it is in US".

Can't you just allow people a little freedom of choice, instead of using USA as a measure of prosperity? I can only imagine if you ask people in Sweden or Netherlands "do you want to live like the US" what the answer would be. On what basis should China be trying to "imitate" USA, and not Netherlands for example? I think that people in China simply want to live better, like all normal human beings. They are finding their own ways and IMO some of their ways are better than US - at least they are not building endless suburbs.

P.S. I apologize if the similarity you were finding was based on the "stuff" you saw in the houses... Most likely this is because it is produced in the same factories :)


Thank you for the response. My apologies if I came across as the 'bad American'. I have lived around the world and done a fair amount of traveling. So it is never my intention to come across as such.

I'm not quite sure though what in my statement made you upset. Maybe instead of the 'US' lifestyle, would 'Western' or 'Consumer'  or 'Middle class Chinese'  been better?

My only point was that I saw people build huge high cities, and suburbs (yes the one person was living in a suburb with a British looking house), had interiors to their homes and offices that looked no different than mine. I was not advocating it but merely making an observation that what must be happening if even a fraction of the people there are trying to live like those that I saw.

Ok, I was not picking on you only, I just had seen similar statement repeated before and I guess you were the scapegoat. My goal was basically to avoid US-centric comparisons, which may distort the picture, and lead to misleading conclusions.

Yes, China is working on achieving Western standards, as much as any developing country. I don't see anything new, abnormal or strange here. It's a fact. Much like Europeans are rattling about their energy dependance form Russia, and the russian energy minister told them - well, this is the reality, try to learn living with it.

And, of course the consequences for the whole world will be harsh. At some point there will simply be not enough for all of us, if we continue things as usual.

What upset me about your post (and apologise if I'm wrong) is that hardly hidden tone of denial - to a great extent and for obvious reasons the West is denying the right of the East to grow the way it has. That's what I'm afraid of. Just like in the case with Russia, this path will lead us to the situation where every country or economic block will be pulling the carpet towards itself and blaming the others, while we need exactly the opposite to get out of this - cooperation. Sorry again if I got you wrong.

Levin: I don't think you have to worry about the persons that own the USA pulling the rug out from under China (they love China, love to invest their money there and wish the USA was more like China-eventually they might get their wish).
The malls of Shanghai and Beijing rival anything available in NYC, Paris, or Singapore.  China has pockets of real wealth and a growing middle class.

While China, like Canada, is a vast land, its wealth is unevenly distributed.  While Canada has its population spread along the border within 150 miles of the US, China's prosperity looks like a T-bone, spread along the east coast and up the Yangtze.

I too have talked to the "common people."  I have talked to an old man in western China who shares a 12x12 room with his sister and mother, the only decoration on the wall a cross, the toilet a slit in a concrete block over a cess pool out in the elements.

I've talked with two old pensioned off, maimed and crippled veterans of Mao's '50s campain who live together in a tiny dark hovel with no electricity.

I've seen wheat spread across the road so that passing feet, bicycles, and scooters will seperate the chafe before milling by the baker who will use it to make noodles.

I've walked gingerly across mothers and babies sleeping on the floor of a train late at night and experienced the deep embarrassment of being forced to take the seat of an unfortunate soul because others wanted to talk to me, the only westerner many of them had ever seen in person.

I've chatted with a Chinese-Tibetan munk, in the small room which he shares with two young acolytes, a single bare light bulb hanging from the ceiling the only acknowledgement of modernism; it won't be missed.

On horseback, I've greeted a man riding his horse on a narrow muddy mountain trail, his three wives and a dozen or more children walking behind, all wearing traditional costume, the nearest electrical outlet miles away in the valley.  

I've seen the ecological and cultural destruction and human displacement due to the Three Gorges Dam. The last remnants of human occupation before the flood looking strangely Orwellian.  Perhaps all for naught as the Yangtze is weakening, due perhaps to global climate change.

I've seen the shanty towns, completely off the grid, along the railroad right of way on the outskirts of Beijing and other large cities. They tend their gardens and trade amongst themselves.  Many of these people come from the country in the off season looking for work in factories.  Some never return to the country.

And I've seen the mass destruction of the hutongs in Beijing, ancient villages of narrow winding streets, and its associated way of life in preparation for the 2008 Olympics, simply because they are a "national embarrassment."

Shanghai looks like a strange cross between Las Vegas and NYC, complete with eight lane highways. But even there you can still find small, if disappearing, pockets of the old lifestyle, the hutongs.  They will pass into history soon.

Beijing is sprouting western style suburbs of McMansions and has a growing obesity problem that is virtually absent in western China where the bicycle still reigns supreme.

It is interesting that some segments of Chinese society want to be just like us in the "west."  They seem to admire everything we say and do. They dream of wealth. In Beijing there isn't a single western popular book or magazine that isn't available in Chinese. Not to mention KFC, McDonalds, Pizza Hut, Hard Rock Cafe, and Starbucks. How did it come to pass that a "communist" nation is willing to pay US$6.00 for a latte when so much of the population earns less than $1.00 a day.

If peak oil threatens western civilization, it will surely devastate the east coast of China.  They, too, live in a technological trap.  But a significant portion of China still lives in centuries past and may hardly notice the passing of western civilization. They may die of thirst thanks to dying rivers and bungled irrigation projects, but they won't starve.  They know how to live off the grid. Many of them have never experienced the grid.

I have not seen the Discovery Channel segments you mention. But it is a shame that the Discovery Channel may have dedicated five segments to people who are becoming just like us.  It is the people who are not just like us whom we need to discover and talk to if we are to learn how to live with the consequences of peak oil.

John McFadden
Ottawa, Ontario


Thank you for the great response. I have traveled enough to cover much of the Middle East and Europe. Asia is my next hopeful journey. I would love to have some of those experiences you mentioned.

Once while hitchiking and backpacking my way around Scandinavia I was helped out by a Hungarian who had migrated to Sweden. He spoke no English and I only spoke English, but somehow we managed to have a conversation as we walked and he showed me the route I needed to take to get to a destination. Those are the great memories I enjoy.

Great post! Very fun to read. I wish I had your experiences.

One should probably add that China is going to be hit by a second problem thirty to fourty years from now: stopping the population explosion came at the expense of limiting the number of children which are now getting into the workforce. When they start retirement, there will be very few to support them. It will be just as challenging for the nation to make up for that shortfall as it is in Europe and the US. The US has immigration to make up for it and plenty of space to grow into. Europe is already struggling.

On the other hand, the sooner the population declines the better. It will lessen the problems in the future. Concerning Europe, if there really will be a shortage of labor, that could as well lessen the queasiness towards second and third generation immigrants, solving two problems at once.
  8.7 mmbpd of oil just for cars? Isn't that way high?

  Isn't China using 7mm/d plus r/p imports for everything?

You are correct. The 8.7 mmbd figure is plain wrong. Current apparent consumption is running at a bit over 7 mmbd.

And yes, attributing all this demand to cars is yet another instance of transference of the context of what one knows to what one doesn't know. Transportation of all kinds in China accounts for only 36% of oil consumption, and personal cars (there are many non-personal cars) for only a few percent (it was 3% in 2003--it's probably closer to 5 or 6% now).

Last Monday, a couple of smart guys published an article in the Financial Times that really incensed me. Briefly, they were comparing the BRIC countries (Brazil, Russia, India and China) and claimed that Russia will collapse again because their oil production will decline. I sent a letter to the FT which got published and here it is:

What use will China be making of its intellectual capital?

By Alfred Nassim

Published: December 6 2006 02:00 | Last updated: December 6 2006 02:00

From Mr Alfred Nassim.

Sir, John LLoyd and Alex Turkeltaub make the case that Russia will eventually suffer grievously - because of its dependence on oil export revenues and the expected decline in its oil production. However, China and India will continue to shine because of their investment in "intellectual capital". This argument presupposes that Russia and the rest of the world are not sharing the same planet. Russia, and other oil producers, always favour domestic consumers and as a result the share of oil being exported is in decline in Russia, Saudi Arabia, Iran, Kuwait and United Arab Emirates, among others. Once it is generally understood that the volume of conventional oil being internationally traded reached its peak in 2005, oil will cease to be subject to the "commodity cycle".

The question now arises as to what the graduates from China's "100 world-class universities" will be doing. Designing better bicycles?

Alfred Nassim,

Ryde, Isle of Wight PO33 2UW

The article that made me do it is here:

India and China are the only real Brics in the wall

By John Lloyd and Alex Turkeltaub

Published: December 3 2006 17:01 | Last updated: December 3 2006 17:01

Few concepts have gained more currency among business people and politicians in recent years than the idea of the Brics – the giant, emerging economies of Brazil, Russia, India and China, whose weight and influence is supposedly changing economic and political realities. Grouping the four, however, obscures a simple fact: while the rise of China and India represents a real shift in the power balance, Russia and Brazil are marginal economies propped up by high commodity prices. This difference has profound implications.

The fundamental difference between China and India on one hand and Russia and Brazil on the other is that the former are competing with the west for “intellectual capital” by seeking to build top-notch universities, investing in high, value-added and technologically intensive industries, and utilising successful diasporas to generate entrepreneurial activity in the mother country. Chinese officials, for example, are committed to developing 100 world-class universities, with a focus on science and engineering; India boasts one of the most dynamic information technology sectors outside the US. Both countries face challenges but they are taking the steps necessary to generate sustainable economic growth.

Russia and Brazil are benefiting from high commodity prices but are not attempting to invest their windfall in long-term economic development. In Russia, the focus has been on concentrating natural resources in state hands, thereby reducing productivity and discouraging foreign investment; in Brazil, the government has been reluctant to make the structural changes necessary to generate strong economic activity across multiple sectors. The infrastructures of both countries remain third world. Neither has proved successful in the “brain wars” – attracting leading professionals.

What do these differences imply? Russia could experience a severe economic correction resulting in geopolitical repercussions once the commodity cycle ends in the short term, and a structural crisis once the age of oil ends in the longer term. Just as the Soviet Union in the 1970s experienced aggressive expansion driven by record oil revenues, followed by a rapid economic collapse in the 1980s when oil prices reached historic lows, the same pattern could take hold in the near future. This problem is aggravated by the fact that the productivity of Russian oil assets is declining rapidly. While we do not wish to overestimate the size of a possible economic correction, it is important to remember that few predicted the Soviet Union‘s demise. The political status quo in Russia could face a shock. In a Russia that undergoes economic stagnation, there may be dangers of a new wave of nationalism as well as a possible period of chaos. Such an outcome would create risks and opportunities. The risks are obvious – geopolitical instability as an insecure Russia yet again seeks a new place in the world. As for opportunities, the current trend of power concentration in the Kremlin could be reversed. Investors could find Russia more open to outside investment in the natural resources sector, as Russia would seek to improve the productivity of underperforming assets while lacking the financial resources to make such investments itself.

The assumption of continuity in Russia, premised on the notion that Vladimir Putin’s administration will clone itself by installing its selected candidate as president after 2008, underestimates the possibility of substantial political changes once the commodity price cycle ends.

Brazil may also face substantial challenges at that time. It could repeat the boom-and-bust cycle that has marked South American economies unless it utilises the current period of high commodity prices to restructure its economy, improve governance and invest in infrastructure. Given the economy’s dependence on commodity exports – these account for about 40 per cent of all exports – a substantial correction in metal prices could also destroy the political consensus in favour of pro-market policies. Brazil, a counterweight to the more radical elements in South America, could become preoccupied with domestic problems while foreign investors got caught in a downward spiral. To consider Brazil as one of the pillars of an emerging global order – which membership of the Bric fraternity implies – underestimates these risks.

Finally, the focus of western policymakers on energy security must not displace a commitment to leadership in “intellectual resources”. Energy security is a critical issue, but maintaining leading capital markets, the rule of law, funding of basic research and the creation of regulatory environments conducive to entrepreneurial activity must be the priority in the US and western Europe. These issues will determine how well the west does with respect to the emerging markets that pose a true challenge to western leadership – China and India. There is no question that the so-called Bric countries are large, emerging market economies that are shaping the economic and geopolitical order. Nevertheless, as political and business leaders devise strategies they would be well advised to focus on China and India.

John Lloyd is an FT commentator. Alex Turkeltaub is a managing director at the Frontier Strategy Group, a consultancy focused on emerging markets

Sorry about the length of this, everything is behind the pay-wall

Many are waiting for the energy price collapse that has always come at the end of a commodity bull run.
Yes, well they are off.  You have to understand the mentality of traders -- they get paid quarterly.  They only look at short term charts -- nothing more than a month.  You can look at long term charts -- meaning 5, 10, 20 and 30 years, and it is absolutely "technically" sound -- the "Bible of Technical Analysis" here which is used for the CTA exam has an entire chapter on long term chart patterns.  Again, 90%+ of traders don't look at this because they buy and sell many times a day.
Why do people assume that China's massive growth pulse will continue indefinately? - I am not saying people here, but those not yet cognizant with the spectre of Peak Oil.

China's growth is almost entirely export-led. It depends on other nations buying the stuff that China makes for export.

This has worked because other nations are happy to export jobs and import stuff. At least until the next inevitable recession, or worse, depression.

What happens to China's growth when this occurs?
Simple. It stops. They have not matured an internal market yet, so they are just as much at risk as the US and Western developed nations are from a recession. The upside of globalisation is cheap barbeque sets and patio furniture and ipods. The downside is everybody gets burnt.

Dont worry about China.(Or should that be Worry about China?) She came to the oil party last, and all the best wine has already been drunk. She may have a booming economy now, but woe betide the day when it collapses and 500 million upper and middle class Chinese realise they are not going to make it to a Californian  lifestyle after all. They will be pretty pissed off, argumentative and equipped with the organisational skills to mobilise the masses. It may take more than a cultural revolution this time.

Remember: It was the middle classes that fomented revolution in France, Europe in 1848 and Czarist Russia.
And look at the collapse of the Hohenzollerns in 1918: sure military set backs had a lot to do with it, but eating sawdust and turnip bread had a fair amount to do with it. Add Spanish flu (soon to be Avian Flu?)in to the mix and Empires can collapse.

In short, China just might not make it in time

Does history repeate itself? or does it just rhyme?

The answer to "Will China keep growing?" depends on how well one understands why China is growing.  For the answer to this, the best I've seen was an article written by Paul Krugman (before he dedicated his life to writing on Politics in the NY Times) about Southeast Asian growth here.

His conclusion: growth is determined by: "growth in the supply of labor and the part due to an increase in the value of goods produced by the average worker."  

Translation: Southeast Asia grew because people moved in from the farms (the countries industrialized) and worked in factories, while the farms become more efficent because they bought mechanized equipment (previously farming in Southeast Asia was more like "gardening.")

The fast rate of growth stops when this urbanization and industrialization stops -- when the percentage of rural population reaches around 10-30% of the total population.  Then the economy grows in line with overall productivity gains.

China STILL after double didgit gdp growth since 1977 has about 70% of its population living in rural areas.  Urbanization in China has a long way to go.

What was revolutionary about Krugman's article was that it looked at gdp growth as growth in production.  Most economists had looked at gdp growth as growth in consumption.  But in reality gross domestic product should equal gross domestic consumption (and should also equal gross domestic income).  Probably looking at production is the best way (vs consumption and income) to predict how fast an economy grows.  

I think this view is correct. It has easy to check parallels in Germany after WW II. The "Wirtschaftswunder" ("economic miracle") of the 1950s was driven more or less by internal consumption for "Wiederaufbau" ("rebuilding") and "Fresswelle" ("eating wave") and only later did many producers have to move to international markets. Unless I am very mistaken, Japan, Korea and Taiwan have similar economic stories.

China does it the other way round... first they satisfy international demand and then they make products for their own market. I believe we are seeing a transition from the first phase of Chinese economics to the second. The second phase will last a very long time. It will take one or two more generations to pull everyone out of their peasant existence and give them an education.

And remember China has about $US1 Trillion in reserves to act as a buffer against certain shocks -- also to support domestic consumption.  Officially the gdp of the economy is only about $US2.2Tr. (nominal, not at Purchasing Power Parity)
Right, I'm convinced the production method of viewing the size of an economy is the correct one.  GDP equals productivity*hours worked.  Take for example the US -- why is the US's economy much larger now than in 1950, it's because every worker is more productive.  Nowadays we work with computers, robotics, high technology.  Population growth has played a role and women entering the workforce has also contributed.

To say the US's economy is much larger now than in 1950 because "we consume much more" is technically correct, but not very descriptive.

Excellent description.  China is moving fast to an internal consumption driven economy for the same reasons that our large companies are looking lustfully at the 1 billion current and potential consumers.  I see 10%/a growth for years, they will clearly pass the us because of raw numbers plus an essentially capitalist economy with relatively modest state interference (compared with india, now more socialist than china). Naturally, this means they will continue to elbow their way towards the front in energy consumption, tempered somewhat because they waste more energy than we do, so the hidden hand will probably nudge them into progressively greater efficiency.
I agree. But I'd cut that 10% down considerably. (You know me - I'm just saying. You could be right, I just think it ain't gonna happen.) You saw India last year. I think we are looking at some shrinkage in fuel use(even in US) in the face of Economic growth. I think Tertzakian is going to emerge as the energy philosopher of this period. Transition is the key. The peakists will not prevail(sadly). They are too sloppy with their logic and theory.
Well, a lurking problem is the largest retiree/worker ratio the world has ever seen resulting from the one child policy, but not for several years. Maybe they will resort to importing Filipinos, just as HK has for years.
What hard about developing an internal market?

Thats the hard part about China growing an internal market.

BTW: Error in my first post: 50 million, not 500 million.
You could add another 100 million industrialised working class to that figure, but the 100, 200, 300 million is actually neither here nor there.

The bulk of the Chinese population is still agrarian.

The energy required to grow an internal market for advanced goods and services will require a massive uplift in available energy to free up labour to work in factories, to permit additional electricity to drive consumer goods, to multiply agricultural output using energy dense fertilisers and mechanisation. Bouyant internal markets require money, and money is just another way of defining Energy.

I feel sorry for China.

It has made it for nearly three thousand years, just getting by, minding its own business emphasising something other than disposible material wealth. And, in the last 60 years it has learned to swallow the western industrialised perpetual growth / export model. And right at the time that the growth driver is peaking.

As I said earlier. She arrived at the end of the party when all the best wine was drunk. Will she pick up the tab?

Such a shame. It may be the undoing of the Middle Kingdom

Seriously. This is potentially tragic for the Chinese. They signed up to a way that has no future, despite steering its own course for so long. They dumped sustainable agriculture in the 60's for Hydrocarbon agriculture, ok, so China had population culls from famine in the last two millenia, but these will be nothing like the famines of the future now that soil and water are degraded and oil and gas is due to become scarecer and more expensive.

But we will get hit too: ASDA (a subsidiary of WallMart , here in the UK) is currently piled high with toys, jew-jaws, doo hickeys and assorted crap. - All for a Christmas Buying frenzy. It is all made in China.

Racks of Shirts, dresses, shoes, trainers, etc.

When the US and Europe go into recession (an inevitable condition of the business cycle), China will tank as well.

Take cheap oil out of the equation, and the shirts,dresses and shoes no longer arrive.

Trouble is: we dont make shirts, dresses and shoes any more do we we? - Shudder to think: we dont make syringes, poly masks, rubber gloves and disposible surgical equipment any more.

The Globalists of Harvard, Yale and The LSE have a lot to answer for in a world that is neither flat or small - without cheap oil...

I have not read Tainter, Having visited this site often enough over two years, I dont think I need to...
But all of the above is Collapse of Complex Societies 101.

You dont need a Masters from Harvard to sus this out.

Excellent post.  
Dorme Bien Leannon
Very Good post.

Guest article?

My point is why China should fall into disarray if they no longer had a large export surplus and a big pile of symbolic foreign currency but instead sold products to people living inside China. If they only get dollars for their export it sounds like stopp giving steak away for free and eating in in the family.

The comming lack of cheap fuel is another problem that effects  both markets.

But the export, especially to oil producing countries can of course be used to buy oil. This do not explain why the export to USA is very large. What do they buy from you besides dollars?

Another piece of lame wishful thinking by the western MSM.  Russia's GDP growth is driven by internal consumption and not oil exports.  One can't account for 10% yearly growth in personal incomes (inflation adjusted) across the whole economy as trickle down from about 60 billion extra dollars of exports in one industry.

Russia's economy was, ironically, saved by the 1998 rouble collapse and debt default.  It revived domestic producers who couldn't compete with the flood of imports.  The 10% GDP increase in 2000 contradicts the oil revenue "theory" and shows it for the pile of steaming crap that it is.  Also, it is only in the last two years that the Russian government has succeeded in applying the law and stopped the funneling of oil revenues into offshore banks.  Instead of having a net outflow of over 24 billion US every year the country now has a net inflow of more than 20 billion US.

Russia is a case study in the failure of monetarist economic theory.  It opened itself up to free trade when its domestic industry was weak and unprepared for foreign competition and it payed the price.  Japan, USA, UK and all of the other leading world economies were all protectionist when they were developing.  After 1998, the currency devaluation in Russia imposed a de facto protectionist barrier on imports.  The oil price helped after 2002 but cannot account for the recovery that started by the middle of 1999.  Industrial growth was 12% for 1999.

Does anyone know, does China's demand growth include the Chinese Military's consumption?  I think China has a 3 million or so man standing army.  I know the US's military's consumption of oil is not included in most oil consumption figures.
Yes, they include military consumption. China does not actually release official consumption figures until nearly 2 years after the fact, and in those statistics, military use is buried in the "Other" category (along with the rest of government, hospitals, schools, etc).

The "demand" figures you see reported in the meantime are all derived, either as "apparent consumption" (crude production + net oil imports) or "apparent demand" (refinery runs + net product imports).

 China is forecasting 2010 gasoline demand of 70mmT. That's only about 1.6 mmbpd against current US use of around 9. They are targeting 10% ethanol content.
Last week brought home the world wide Chinese scavenger hunt for resources with the opening of a nearby nickel mine. All the output was forward sold to China and financing came largely from Chinese loans, not stockholder equity. I see a danger that one day the Chinese will be able to control the prices of resource inputs. The West might then see what economic imperialism feels like from the other side. Not only is your job less secure but you have to compete for dwindling fuel supplies just to drive your car. Add to that China's growing atmospheric emissions which is the flip side to cheap manufactured goods. Some kind of confrontation seems inevitable.
I see my post from a few hours ago was deleted.

 Do you modern day doomsday pessimists feel the need to censor thought that doesn't follow the party line??

No.  Your post was deleted (not by me, BTW) because it was off-topic and redundant.

This is not an open thread.  Posts such as yours should go in the open threads (DrumBeats).  

Indeed, the article you posted was already posted today (by me).  There was already a fairly long discussion of it in today's DrumBeat.  

And thanks to whomever for removing the redundant and off-topic piece.
Perhaps the deleter could leave a small note explaining the deletion?
This from the CFR report relevant as well (sorry for the size):
can't read this on the right past late 04.
Click here.

So, chinese imports doubled in four years to 05, or 20%/year, and 06 eight month data shows maybe 22% net all products.  This happened as chinese production grew, imports will go up faster when chinese production stagnates/declines soon.

We import maybe 5x what the chinese do, but this ratio is declining fast.

Well this article is nothing new, China will collapse, it cannot possible sustain the pace, further more, Lester Brown says so in Plan B- 2.0

Question, how many house holds us paper towels instead of wash clothes? Remember the days when OUR parents used them? today we use convenience as the excuse to purchase kleenex, and bounce, then toss them into the landfill site. China's water, energy, landfills are going to pay for this throw away society.  

Its tough to say what will collapse first, energy or other countries natural resource policies. We send them orders via Fax or email to manufacture goods to be shipped to N.A. There is nothing going back there to supply the factories, additionally, the USGS says there is only 22yrs left of copper in the worlds mines.


I do find it a little sad that drought induced shrinkage of hydropower is driving more coal power production which will presumably drive more drought... Just how low can you go in discounting the future vs present? What are the Chinese economists thinking?
There are enormous amounts of useless copper in the ground in every industrialized country. It was used for phone lines which can all be made obsolete by optical fibre. Aluminum is an almost equally good conductor for electricity by volume and much better by weight. The only inconvenience is that it is not easy to get it flexible. For many applications like power lines that is not an insurmountable problem. Expensive, maybe, impossible, by no means.

And, I guess, if our parents didn't die from dirty towels, neither will we. Inconvenience is more defined by upbringing than by absolutes relating to survival.

I certainly agree that we worry more about inconvenience than necessities for survival. Thats why I discount an awful lot of Doomer B.S.. What the US lacks is the political leadership and social will to change-our souls are being sucked dry by vampire TV pablum. This nation did just fine for the 175 years before Victoria Secrets and Cadillac commercials, was prosperous before the Interstate Highway System. We were a heck of a lot more free before we started watching 24 hour news channels and inventing terrorists swarming across our borders. Do the math, that new "border fence" is going to cost $35,000 a linear foot! If you hate this country buy Halliburtn stock-I'm sure they'll get the contract, the Bush family owns too much of their stock.
  Enough of that rant. Seriously, take a trip to Mexico if you would like to see how to get by on very little. And then, take WT's good advice to heart!
   Economise-learn to get by on 50% of your income and use the money to pay off your debts and save
    Localise-patronise your neighbors, buy local produc
    Produce-learn something that actually produces a product, learn to garden

   And, turn off that fucking TV! Its eating your brain!

I think that the land area devoted to urban/suburban developments has doubled since 1960, and we are still spreading out . . .
Whaddya think, Oilrig? This bastard's trying to cut in on our turf. I thought we handed out these licenses. Now Prof. Goose is trying to get in on the action?

As Borat would say,"Wawaweeweh!"

The mysterious they. Your spooky bosses. You're going to dump me, aren't you. C'mon, let's go have lunch. Talk about it. Red flag. Classified. Starting to rhyme. Can never spell ryhmne.

Concerning copper...

New tech is always coming along. There is a new mining operation starting up soon on MN's iron range, using a new technique. They will take useless ore on the site of a closed down taconite plant and turn it into Copper, Gold, nickle etc.

  For details look up