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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: hank2010 who wrote (25535)	12/14/2003 10:55:43 AM
From: el_gaviero	Read Replies (4) \| Respond to of 39344

China and energy, again. It seems to me that China is following the American model, and is putting cars, and what cars make possible, at the heart of its process of industrialization. I say this based on no knowledge except what I read about China making and selling large numbers of cars. “Cars and sprawl.” That’s their strategy. Does it not depend totally on the ability to ramp acquisition of crude oil? If figures can be believed, oil consumption in China is skyrocketing, and this would have to be the case. Most people buying cars surely are first time owners, and thus represent a new source of demand. You can talk all you want about nuclear and coal, but look what China is doing? All those millions of cars now appearing on Chinese roads require infrastructure, and this infrastructure is being put in place. “Cars and sprawl” is a strategy that the world understands. To follow some other would be a plunge into the unknown, and can only be done slowly, over time, with difficulty, based on the spontaneous actions of millions of people. In other words, what I am trying to say is that changes of strategy are slow. Let me give an example of a minor one from personal observation. Railroad tracks of what was then the C&O (now CSX) went through my grandmother’s farm in Virginia. As a child, probably in the late forties or early fifties, I remember seeing steam engines ply those tracks. We kids loved them, and hated it when, by the mid-fifties, steam engines disappeared, to be replaced by diesel locomotives. This means what? Keeping in mind that by the mid-1950s internal combustion engines had been around for fifty years, it means that half a century passed before a superior technology replaced an inferior one. But the problem doesn’t stop there. Not until the early 1980s did firemen and cabooses, and a worker in each caboose, disappear. In other words, it took eighty years to get beyond an inefficient technology AND its human accommodations, compromises and arrangements. Now here goes China, charging off down a trail we blazed 100 years ago, and a trillion barrels of oil ago. The problem is not just that nobody knows what to do except “cars and sprawl,” but that a vast amount of human expectation and accommodation and knowledge has built up around it. When the Chinese realize that they cannot go down the trail we blazed, they are going to experience mental turmoil. How could they not --- your father makes eighty cents a day, yet now you have the idea that maybe you can do better. You see a wonderful possibility --- elevation above his grinding level. Then suddenly -- bam! --- this possibility disappears. You wouldn’t be in a happy frame of mind either. I don’t know what is going to happen, but I think it is going to be one hell of a ride.