Tuesday, October 14, 2008

My Point Exactly

China's Oil imports for September 2008 were up 10% over September 2007.  So much for a contraction in the Chinese economy.

There IS NO DEMAND DESTRUCTION in China, India, or the Middle East.  Russia? I doubt it, but we will have to wait for up to date data.  The imports the U.S. is NOT getting are instead going to China.  This what the talking heads are referring to when the spout "demand destruction".  


Mentatt (at) yahoo (dot) com


8 comments:

bureaucrat said...

I have now seen two reports on the weakening of the Chinese economy, noticed just after the Olympics -- one story on NBC News and one story I just read in Forbes. They may indeed be importing more oil, perhaps to restock after importing nothing during the Olympics, but there is the belief out there that China is finally slowing down. Given the increase in the Baltic Dry Index (the index for shipping costs), it wouldn't be too hard to believe China's costs of doing business is escalating. Demand destruction is still a possibility.

A Quaker in a Strange Land said...

Oil is an empirical data point. September is just one month's data, so we will have to follow the story.

Still, few people think China will CONTRACT. Perhaps expansion will slow from 10+ to 7 or 8 %. That means they will demand more Oil, not less.

Anonymous said...

China has a plan to get free of foreign oil imports. the U.S. no so much...

Hopefully China will do it sooner than later.

Our leaders can't plan a bathroom break.

bureaucrat said...

China has the same land mass as the U.S., and we are dependent on oil imports, so why wouldn't China eventually be? They have their own stash of coal which could be made into oil (which would pollute even more), but they are just as dependent on oil imports as we are - even more so given their desire to produce everything the world needs.

bureaucrat said...

If the world needs oil so badly, why is the IEA cutting oil demand projections, and why is the price of oil collapsing so fast? Depression? Deflation? :)

Anonymous said...

China produces real goods which can be exchanged for energy.

The US produces bombs and toxic financial paper. There is a limited market for both of these.

bureaucrat said...

Slight change in my thinking. :) The Baltic dry index is now plunging, and so the expense of shipping the goods isn't going up, but the banks are refusing to lend and guarantee ships' cargo. Same effect tho. My bad.

A Quaker in a Strange Land said...

Bureaucrat:

Sometimes the market acts irrationally... this MIGHT be one of those times...

Oil is still up over 500% in less than 10 years, though it should be mentioned that it was up 1000%. Still, I do not know why people bandy around the "Oil high $147" thing BECAUSE...

31 BILLION barrels of Oil trade every year. Do you know how many traded at $147???? Less than 30,000 (300 futures contracts) Now divided the 30k into the 31 BILLION...

Get my drift?

It is the AVERAGE that a commodity trades for during the year that an economy feels. Only traders care about the high and the low....