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China's Fuel Problems, or, A Shortage of Sand
grey_whiskers ^ | 11-1-2007 | grey_whiskers

Posted on 11/01/2007 8:47:24 PM PDT by grey_whiskers

See for example this article as well...

It seems to be a commonplace these days that the days of the West, especially the United States, are numbered. We are about to be supplanted by a rapidly-growing China, combining an inexhaustible supply of young, cheap workers, a spirit of entrepreneurism greater than anything the United States has ever seen, and the world’s largest foreign currency reserves. Even tech giant Cisco Systems has announced it will be spending 16 billion dollars over the next 10 years in China. (How many US programmers and techies, by the way, could Cisco afford for that kind of money?)

China, it seems, can do no wrong. Or can it? Passing over for now the reports of contaminated toothpaste, the lead-laced toys, or the industrial pollution. After all, aren’t these merely the growing pains of industrialization, similar to that which Europe and America have passed through and conquered? Is there any flaw in the plans of the Chinese Communist Central committee which might throw a monkey wrench into the works?

I came across a story on Reuters recently – yes, that Reuters. Just because they suffer from Bush Derangement Syndrome does not keep them from licking their chops when there is trouble elsewhere in the world. “If it bleeds, it leads” is still the rule in every newsroom.


BEIJING/SHANGHAI (Reuters) - China's worst fuel crisis in two years spread to the capital and other inland areas by Wednesday, and one man was killed in a brawl at a petrol station queue, upping pressure on the government to intervene.


Did you hear that? People in China are killing each other over long lines at the gas station! This brings us back all the way to the days of Jimmy Carter in the United States. (Speaking of dimwit leftists.) But some of the facts repeated later in the article are even more fun – and instructive:


Diesel costs about 64 cents a liter at the pump in Beijing, versus around $1 in Singapore and $2 in Britain.

But a recent rally in global crude prices to above $90 a barrel has deepened large firms' losses and made them ever more reluctant to keep markets supplied.

A source at PetroChina said the company would lose 1,500 yuan ($200) a tonne by selling imported diesel at Chinese pumps.

So what, you say. China has huge foreign currency reserves. They can afford it. Not forever! There are several problems here. First, there is the issue that if China subsidizes its industries below cost, they will gain market share – which sounds good in the short term, but it will mean that those industries will grow larger, and require larger subsidies over time. Second, there is the problem, already discovered by Socialists in the United States and in Europe, that once a group becomes accustomed to sucking on the government teat, they are *very* reluctant to let go again. This means that the subsidies may become a permanent drain on the government coffers – “too big to fail” is not just seen in America. (And, by the way, once other people hear about how good a living one can make mooching off of the government, they will demand “their share” too. Abraham Lincoln said that a nation could not endure half slave and half free, but it applies to socialist and capitalist economies too.)

So that is the long term, theoretical risk facing China. But there is a more immediate one. Don’t forget that price acts as a signaling mechanism, to communicate scarcity or plenty. In a market-based economy, supply and demand rules—if there is too much demand for an item the price will go up to compensate, lowering demand, and sending opportunity (in the form of larger profits) to knock on the doors of other suppliers. In China, there is no such signal. And we all know what happens when you price an item below its market value. Shortages. As the old joke goes, if the Communists took over the Sahara Desert, what would happen? The answer – nothing much for two years, followed by widespread shortages of sand.

But the problem for China is – with so much of their economy based on manufacturing and export, and much of that very inefficient – and their economy also based on Command-and-Control, lacking mechanisms to adapt – what kind of a shock will result when the inevitable shortage occurs? Will China be the ones to launch a War for Oil, rather than (as claimed of Iraq) the U.S., or (as in Tom Clancy’s Red Storm Rising), the old Soviet Union?

Stay tuned.


TOPICS:
KEYWORDS: china; energy; gasoline; jimmycarter; oilshortage; whiskersvanity
Cheers!
1 posted on 11/01/2007 8:47:26 PM PDT by grey_whiskers
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To: grey_whiskers

Good questions. China is running like a bull in a China shop(pun) They do not use social and industrial or economic checks and balances


2 posted on 11/01/2007 8:57:43 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: grey_whiskers

By way of comparison we hear about ructions in Iran over rising prices for gasoline.

Gasoline is heavily subsidized there and as a result, people use a lot of it. Of course, when something is artificially price-capped that means there’s no incentive to make more of it. Which is why Iran’s own refining capacity is so limited. Why build refineries when there’s no opportunity to make money at it?

We have been reading about China’s exploding appetite for energy, I gather subsidized fuel prices have everything to do with that.

I’m having difficulty how a “War for Oil” would work in the here and now. The world price is the world price whether it comes from halfway round the world or your own back yard.

The Imperial Japanese invaded the Pacific because the embargo physically prevented them from buying oil anywhere at any price.

How’m I doing so far?


3 posted on 11/01/2007 9:06:49 PM PDT by sinanju
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To: grey_whiskers

Well said.


4 posted on 11/01/2007 9:12:27 PM PDT by ConservativeMind
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To: grey_whiskers
By the way, they really aren’t subsidizing the diesel cost by much, if any.

$.64/liter = $2.42/gallon.

Take away just some of our extra taxes placed on gas, and you’ve got the same rate here, also without subsidizing.

5 posted on 11/01/2007 9:17:54 PM PDT by ConservativeMind
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To: mylife
"China is running like a bull in a China shop(pun)"

I thought it was running more like a Chinese Fire Drill.

6 posted on 11/01/2007 9:21:10 PM PDT by who_would_fardels_bear
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To: ConservativeMind
Read the article about the costs to the Chinese oil companies -- it says they lose $200 / tonne (A tonne of diesel?)

And remember the exchange rate, per capita income and most costs are still much less over there.

Cheers!

7 posted on 11/01/2007 9:25:50 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: who_would_fardels_bear

Lets not make this a pissin contest ;0)


8 posted on 11/01/2007 9:28:31 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: mylife

It just like apartments in New York City. Control rents to “help” the poor and guarantee a shortage of affordable housing. The flip side of this is that the better educated more prosperous will snap up those subsidized/controlled apartments (rent control is just a subsidy paid by the landlord to the tenant in the form of foregone rent). They are much more proficient at gaming the system than the poor. Therefore, you wind up not only with a shortage, but with the poor being victimized by this shortage much more than if the product/housing was decontrolled and supply was allowed to increase. NYC’s solution, billion dollar subsidies to renters and billion dollar subsidies to builders. Complete insanity that is being replayed around the globe in different circumstances but with similar results.


9 posted on 11/01/2007 9:41:50 PM PDT by appeal2 (r)
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To: appeal2

Its all fun and games till someone gets hurt ;0)


10 posted on 11/01/2007 9:46:48 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: sinanju
How’m I doing so far?”

China needs to perfect the amorphous silicon solar cell, since they have no electrical distribution grid. They now are the largest producers of such cells in the world, and this is their only “out” when it comes to energy. Copper for a grid is just as scarce as oil...

Look to China for solar power.

11 posted on 11/01/2007 9:50:13 PM PDT by babygene (Never look into the laser with your last good eye...)
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To: babygene

I saw an african fellow lamenting that the UN and do gooders force Solar energy on them and it isn’t as efficient as conventional energy.

The fellow connects the dots and asks: “How can we run a Steel Mill on solar panels”?


12 posted on 11/01/2007 9:54:44 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: babygene

And you are right, Copper is scarce


13 posted on 11/01/2007 9:57:55 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: grey_whiskers
The US Left Coast holds out their fuel to sell to the air lines who command more demand. The advantage of free market is that other products become more attractive—like home grown bio fuels (since tapping the ANWR is halted by you-know-who).
14 posted on 11/01/2007 9:59:16 PM PDT by SaltyJoe (Lenin legalized abortion. Afterward, every life was fair game for Death)
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To: mylife
“How can we run a Steel Mill on solar panels”?

A thousand watts per square meter... When you consider that ALL energy except nuclear is solar in it’s origin, it makes sense... The big advantage is that the power can be produced and used without a distribution network...

15 posted on 11/01/2007 10:01:29 PM PDT by babygene (Never look into the laser with your last good eye...)
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To: babygene

“A thousand watts per square meter...”

Really? Thats serious energy.

The poor fellow I told you of ewas a doctor who ran a clinic. he had 2 panels in the roof and all he had in the clinic on electricity was a refrigerator(with vaccine inside) and a single compact fluoresent light bulb. He lamented that he could not run both off the solar panels and had to shut the clinic at nightfall.

1000 watts is a lot of power


16 posted on 11/01/2007 10:06:37 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: babygene

1 square metere of panels = like 100 volts x 10 amps like enough to power half an american home.

Still, impressive for solar panels


17 posted on 11/01/2007 10:09:17 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: grey_whiskers

I heard or read somewhere recently that Chinas demand for petroleum is growing by 10 percent per year. Maybe someone can extrapolate that out to what percent it will increase the cost of fuel annually.


18 posted on 11/01/2007 10:11:00 PM PDT by B4Ranch (( "Freedom is not free, but don't worry the U.S. Marine Corps will pay most of your share." ))
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To: B4Ranch
I heard or read somewhere recently that Chinas demand for petroleum is growing by 10 percent per year. Maybe someone can extrapolate that out to what percent it will increase the cost of fuel annually.

We need to know the price elasticity for that -- you just inspired *another* vanity.

Cheers!

19 posted on 11/01/2007 10:25:42 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: babygene
Aye, when I lived in Scottsdale I took a tour (through a local Boy Scout troop) of a custom energy-efficient house which had solar panels on the roof and other places...the solar collectors had been sourced from China as the most efficient.

Cheers!

20 posted on 11/01/2007 10:28:46 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: ConservativeMind
By the way, they really aren’t subsidizing the diesel cost by much, if any. $.64/liter = $2.42/gallon.

Careful. Go out there with too many facts on China and you will be pounced on.

21 posted on 11/01/2007 10:31:00 PM PDT by BJungNan
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To: grey_whiskers
Even tech giant Cisco Systems has announced it will be spending 16 billion dollars over the next 10 years in China. (How many US programmers and techies, by the way, could Cisco afford for that kind of money?)

That's 1.6 billion dollars per year. That's about 1000 programmers, at $100K per year salary, each. Not really all that many..

Read the article about the costs to the Chinese oil companies -- it says they lose $200 / tonne (A tonne of diesel?)

About 300 gallons in a tonne (metric ton, about 2205 pounds). So supposedly they're subsidizing $0.67 per gallon. I think that's a bit high, given that the price for diesel I saw yesterday outside of Minhang (a district of Shanghai) was $0.64 per liter ($2.40 per gallon). I don't think diesel runs $3.00 per gallon without taxes...

A thousand watts per square meter...

'Tis true! Solar can average 1000W per square meter, IF:

You get 100% conversion
You can get full sunlight (not filtered, not cloudy)

Realistically, you get around 10% conversion, and you get 6 hours a day of decent output. Meaning you get around 600-800 Whr per day, per square meter. Given the typical American home uses about 35 kWhr per day, so you'd need around 60 square meters of solar panels to collect the energy needed.

Given that decent panels run around $300/square meter, were talking about an $18,000 investment in panels, not including inverters, batteries, switchover boxes, etc. I'd expect to see a cost around $30,000 to convert to solar.

Around my US home (Snohomish County, Washington), power is $0.08 per kWhr. About $2.80 per day for a typical American home (about right, I spend around $65/month average on power). That's about a 30 year term to simply break even, not including the time value of money...

Solar really isn't viable for general power generation yet. Heating? Sure, passive solar heat is great. But for power generation, we need a serious 4 or 5X increase in panel efficiency on a BIG scale - with the costs held constant or dropped - to see it as a viable source.

22 posted on 11/01/2007 10:39:17 PM PDT by PugetSoundSoldier (Tagline: Kinda like a chorus line but without the legs)
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To: PugetSoundSoldier
I agree with your post except for "you get 6 hours a day of decent output". In many parts of the country you can not achieve this. Also assume about an 8.5% charge, inverter and system loss minimum. I agree with your numbers and think solar has applications, but is a pie in the sky dream as a replacement for distributed energy.
23 posted on 11/01/2007 11:00:56 PM PDT by PA Engineer (Liberate America from the occupation media.)
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To: mylife

“A thousand watts per square meter...”

That is at 100% efficiency. We can only get about 15% at the moment, and that only during part of the day.


24 posted on 11/02/2007 2:08:35 AM PDT by marktwain
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To: PugetSoundSoldier
“Solar really isn’t viable for general power generation yet. Heating? Sure, passive solar heat is great. But for power generation, we need a serious 4 or 5X increase in panel efficiency on a BIG scale - with the costs held constant or dropped - to see it as a viable source.”

It is viable in some locations. If you want to go a 1/4 mile off the power grid, for example, the costs of putting in a power line make solar worth while in many areas of the Southwest.

I think your 5x-6x figure is rather high. Increase the watt/dollar ratio 2x and solar would be viable over half the country. We have already dropped the watt/dollar ratio from thousands to about 5. It doesn’t seem that a drop to 2 or 2 1/2 would be impossible.

25 posted on 11/02/2007 2:16:23 AM PDT by marktwain
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To: PugetSoundSoldier

Oh, and the other factor is your relative cheap power, in the North West, where cloudy weather and lots of rain make hydroelectric generation cheap and solar expensive. We pay about .12 a kilowatt/hour here, and many places it is much more. That is a 50% relative increase that makes solar as much more attractive.


26 posted on 11/02/2007 2:19:22 AM PDT by marktwain
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To: babygene
they have no electrical distribution grid

Copper for a grid is just as scarce as oil...

Nearly every distribution and transmission line in the world is built with Aluminum and has been for many decades.

27 posted on 11/02/2007 4:34:55 AM PDT by thackney (life is fragile, handle with prayer)
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To: babygene; mylife
A thousand watts per square meter...

It is going to be rather difficult to produce a thousand watts per square meter when that is more solar radiation than what shines on Arizona and Nevada on average.

National Renewable Energy Laboratory, Solar Maps
http://www.nrel.gov/gis/solar.html

28 posted on 11/02/2007 4:43:10 AM PDT by thackney (life is fragile, handle with prayer)
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To: grey_whiskers
Will China be the ones to launch a War for Oil, rather than (as claimed of Iraq) the U.S., or (as in Tom Clancy’s Red Storm Rising), the old Soviet Union?

They are already doing so...albeit a non-shooting war so far.

They are doing everything they can to take international oil sources off the market. Clearly trying to tie those sources up for China exclusively, and thence are trying to strangle the West which depends on open market access.

29 posted on 11/02/2007 10:55:07 AM PDT by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: PugetSoundSoldier
That's 1.6 billion dollars per year. That's about 1000 programmers, at $100K per year salary, each. Not really all that many..

Let's review the math.

1.6 billion dollars ==> 1.6 x 1000 = 1600 dollars
x 1000 = 1.6 million dollars
x 1000 = 1.6 billion dollars
which is 1.6 x 1000 x 1000 x 1000
or, 1.6 x 1000 x 1000 x 1000
or, 1.6 x 1000 x (10 x 100) x 1000
or 1.6 x (1000 x 10) x (100 x 1000)
or, 1.6 x 10,000 x (100,000)

or 16,000 programmers at $100,000 each.

Which is a lot more than 1000 programmers.

EVERY YEAR FOR TEN YEARS --> 160,000 programmers.

You must be an IT executive, right? ;-)

Cheers!

30 posted on 11/02/2007 5:00:12 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: grey_whiskers; AdmSmith; Berosus; Convert from ECUSA; dervish; Ernest_at_the_Beach; Fred Nerks; ...
Thanks grey_whiskers for this, uh, three, four month old topic. :')
First, there is the issue that if China subsidizes its industries below cost, they will gain market share - which sounds good in the short term, but it will mean that those industries will grow larger, and require larger subsidies over time. Second, there is the problem, already discovered by Socialists in the United States and in Europe, that once a group becomes accustomed to sucking on the government teat, they are *very* reluctant to let go again. This means that the subsidies may become a permanent drain on the government coffers - "too big to fail" is not just seen in America. (And, by the way, once other people hear about how good a living one can make mooching off of the government, they will demand "their share" too. Abraham Lincoln said that a nation could not endure half slave and half free, but it applies to socialist and capitalist economies too.)

31 posted on 03/13/2008 11:32:13 AM PDT by SunkenCiv (https://secure.freerepublic.com/donate/______________________Profile updated Saturday, March 1, 2008)
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To: SunkenCiv
Yikes! A blast from the past!

Thanks very much for the compliment...to what do I owe the honor?

Cheers!

32 posted on 03/13/2008 5:43:41 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: grey_whiskers

Believe it or not, I did an FR engine search for “sand”, and this one was in the list. :’)


33 posted on 03/13/2008 7:29:02 PM PDT by SunkenCiv (https://secure.freerepublic.com/donate/______________________Profile updated Saturday, March 1, 2008)
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To: mylife; babygene

Well, not really. The earth’s distance from the sun allows it to have around 1366 W/M2 ABOVE the atmosphere. This sounds like a lot but one has to factor in many conditions.

On average, approximately half of this insolation is scattered, reflected, or absorbed by clouds and other phenomena. Furthermore, location, latitude, time of year, and local conditions must also be taken into consideration. The amount must also be divided in half to account for night. Lastly, conversion losses from DC to AC, storage drain, and transmission losses must be factored in.

Conversely, the conversion efficiency of the photovoltaic cells must be considered. These currently range from 5-25%. This should exceed 50% within the next three years, pending recent developments.

For example, Phoenix, AZ can expect around 6600 Watts per square meter per day on average throughout the year. This translates into an average of 550 Watts per sq meter every hour of daylight. OTOH, Chicago only averages 3100 Watts per sq meter per day throughout the year (258 watts per hour).

Now let`s look back at this poor doctor. His panels probably didn`t produce more than 1000 watts per day. If he had a small refrigerator, like a 4 cubit foot unit, that alone sucks up 1000 watts per day. No wonder he was screwed.


34 posted on 07/28/2008 8:03:44 PM PDT by Edward Watson (Fanatics with guns beat liberals with ideas)
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