price of oil down because China raising the price for their people.

[dkf]

I'm sure the Chinese will suffer. So are we against the Chinese raising the price of oil for their people?

If we aren't then why do we expect Government to lower the price here?

[anigbrowl]

1. with 8-9% GDP growth, they can afford a slight slowdown

The Chinese government was getting a bit worried about inflation anyway so this is not so surprising. Plus car ownership is very different in China so the economic burden will be spread more across the commercial sector. An 8% increase in fuel prices (over there) is not too drastic for the Chinese, overall. Don't know how much pressure it will take off global oil prices...mmm, I'll guess at about 3% for the next 12 months. On the other hand if the Olympics goes off OK for them then you've got to figure that that will lift their economy further next year.

If Hank Paulson has any sense he got on the phone today to say 'Xie xie' a lot. You notice how that move had a hell of a lot more impact on the markets than the Saudis talking about increasing production. We are going to be Very Polite to China this summer.

[dkf]

2. But it does show that China's oil demand is definitely impacting

the price of oil.

Some here think that its all the oil bogeymen that are causing the rise in oil prices. But even speculators won't trade if they see no supply problems whatsoever.

And then they don't take into account the fall of the dollar.

[anigbrowl]

3. as it happens, I've been doing a lot of research into this

I'm thinking of making a documentary film about it - in a previous career I did a lot of work in the financial sector so I'm very aware that it's a complex mix of factors. There is some irresponsible speculation going on, which is a Bad Thing. But there are lots of other fundamental drivers - war, the growth of China, worries about long-term availability (sure, there is tons of oil in 'tar sands' or various other deposits, but it's a hell of a lot more expensive to extract and refine than light sweet crude), and the environmental danger of using too much co2.

The sad part is that if we had made a commitment towards seriously reducing our use of fossil fuels back in the 1990s, the price of oil would not be as high now and we would be using less of it. we have literally burned a lot of the wealth we created to no useful purpose, in deluded modern equivalent of a permanent potlatch.