Opec playing for high stakes in China

[Wordie]

http://business.timesonline.co.uk/article/0,,8210-1957578,00.html
by Robert Cole

Opec playing for high stakes in China

...Whatever the most apt description of this week’s visit by Sheikh Ahmad al-Fahd al-Sabah, the president of Opec, to Beijing, no one should be in any doubt about the size of the stakes. Representatives of the most important providers of world energy are meeting the deputies of a country that in a few short years could be the world’s largest and most dynamic economy.

The mighty USA has rival claims on both these titles. It is easy to forget that it is a huge producer of oil because it consumes most of the output itself. It still holds a commanding position on the global economic landscape, too. But the fact that the US economic powerhouse is, and always has been, self-sufficient in oil makes the Opec-China relationship all the more intriguing. Or frightening.

...Perhaps more critically, however, Opec countries need a full understanding of the scale of China’s needs. It may meet some of those needs itself by delivering barrels of the black stuff. But the price at which it sells all its output will be affected by Chinese demand.

The world oil market is incredibly large but it is also remarkably tight, and relatively small shifts in the supply and demand equation can have exaggerated effects on the price of oil. Chinese demand, meanwhile, will be no small influence. It is likely to be the largest part of the equation.

[Earth_First]

1. Meet our next REAL issue: n/t

[teryang]

2. America is a financial powerhouse- distinguished from economic

...powerhouse. An economic powerhouse is in the manufacturing and production business. An economic powerhouse accumulates capital and increases its standard of living.

A financial powerhouse is mostly interested in manipulating government contracts and tax loopholes, the value of the currency and equities; and exporting capital to cheap unregulated markets. What is left at home is red ink and a declining standard of living.

The former marks the emergence of a new hegemonic power. The latter marks the decline of a former hegemonic power.