Every time someone drives less in this country to save gasoline, someone in China will buy a car and take over the driving. They have the money and a stronger currency. 10 million new cars will be sold in China this year.
"Auto sales are expected to exceed 10 million units this year, which would represent a full year sales growth of 14%,” Xinuha reported, citing China’s automobile manufacturers association."
Most Important Oil News This Past Week has Gone Unreported in U.S. (China Car Sales Up 17.4%)
Posted: June 12, 2008
Until the American news media understands that what’s happening outside the U.S. is more important than what’s happening inside, U.S. investors will struggle to understand why oil prices are forecast to hit $150 and perhaps even $200 a barrel over the next several months.
Virtually all other American-based news organizations ignored recent reports that Nigeria’s own energy advisers have warned that the country’s oil industry is in “grave danger,” just as they have largely ignored recent reports on faltering oil production in Mexico, the North Sea and elsewhere. (For more on Nigeria, see Nigerian Government’s Own Energy Advisers Warn That Nation’s Oil Industry Is In ‘Grave Danger’) Now they are ignoring another huge story – China’s startlingly high new-car sales figures.
According to Xinhua News Agency, the official press agency of the government of the People’s Republic of China, passenger car sales in the first five months of 2008 were up 17.41% over the prior-year period. “Auto sales are expected to exceed 10 million units this year, which would represent a full year sales growth of 14%,” Xinuha reported, citing China’s automobile manufacturers association.
At this rate, it won’t be long before China’s annual car sales exceed those of the U.S., which reportedly are on track to decline to roughly 15 million units this year. Such robust sales growth puts Chinese officials in a bind. If they remove fuel subsidies, they risk alienating many millions of Chinese families who are just starting to enjoy a middle class way of life. And so Beijing keeps importing more and more oil. If you recall, high Asian demand is why Morgan Stanley recently predicted oil would hit $150 by July 4.
While many experts believe oil prices will fall after the Beijing Olympics, it’s hard to see that happening, given these new car sales figures. Moreover, China’s trade surplus gives Beijing the dollars it needs to keep the imported oil coming. Oh, and for anyone who thinks China’s traffic problems will cause car sales to slow down, check out this video of China’s public transit in action: mail.mtholyoke.edu.
So the next time you read or see a story about how American drivers are cutting back in the face of high gas prices, just remember what’s happening in China and the strain it’s putting on trying to maintain a balance between global oil supply and demand.
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