Chinese people are hungry for capitalism/consumption. The Chinese Govt, no way will increase the price of gas too much but may be in little increments.
China has huge foreign reserves that is how they can afford the subsidy and as long as they have that trillion dollar reserve, reducing the subsidy dramatically is out of the question. Because it will cause riots.
India on the other hand does not subsidize gas. It is sold for more than 4.50/gal dollars a gallon in India. Yet indian car sales are going thru the roof. It is not the income that enables people to buy car, it is the smell and appetite for consumption. To understand my words, you need to spend yearrs in a third world country like myself. I saw communities making less than 2 dollars an hour yet they will buy the best car that their credit would let them with %20 annual interest. Once you understand this concept, you will understand why the oil consumption in 3rd world countries will never go down and rather boom in the coming years. This is just a starting point.
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THE Energy Subsidy Thread (merged)
Re: Oil Subsidies Increasing Oil Demand
by misterno » Thu 12 Jun 2008, 23:01:04
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Re: Oil Subsidies Increasing Oil Demand
by MonteQuest » Fri 13 Jun 2008, 01:25:19
$this->bbcode_second_pass_quote('Denny', 'I') think there should be a motion passed by the United Nations to end fuel subsidies by every member country as these lead to overcomsuption and extra CO2 emissions.
No, they lead to poor people to being able to afford access to energy.
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
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Re: Oil Subsidies Increasing Oil Demand
by jeffvail » Fri 13 Jun 2008, 10:14:11
I have a post up on The Oil Drum today arguing that eliminating subsidies will not result in a significant decrease in demand, and that under certain circumstances their elimination could actually increase demand over the long term.
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Re: Oil Subsidies Increasing Oil Demand
by emersonbiggins » Fri 13 Jun 2008, 10:15:55
$this->bbcode_second_pass_quote('Drifter', 'S')o perhaps we might see very little demand destruction in China and India as long as those governments continue subsidizing gasoline and diesel to keep fuel prices down.
Ummm....
$this->bbcode_second_pass_quote('misterno', '
')India on the other hand does not subsidize gas. It is sold for more than 4.50/gal dollars a gallon in India. Yet indian car sales are going thru the roof.
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Re: Oil Subsidies Increasing Oil Demand
by kublikhan » Fri 13 Jun 2008, 13:33:19
$this->bbcode_second_pass_quote('jeffvail', 'I') have a post up on The Oil Drum today arguing that eliminating subsidies will not result in a significant decrease in demand, and that under certain circumstances their elimination could actually increase demand over the long term.
Evidence about what is actually happening does not jive with your theory though. Oil consumption in subsidy free economies is dropping. While oil consumption in subsidized economies is rising.$this->bbcode_second_pass_quote('jeffvail', 'A')lso, the high fuel taxes in Europe have something of a similar effect to the small cars driven in Asia, in that they make the increases in underlying oil prices less significant. If you've already oriented your life, work, housing, etc. in Germany around $8/gallon gasoline, it's not a huge change in your budget when that goes up $2 because of underlying oil price increase. On the other hand, an exurbanite in the US who oriented their life (exurban home that they're probably upside down on, big F250, long commute to work and shopping and kid's school, etc.) around $3 gas, it's a huge change in your budget to go up those same $2 to $5/gallon gas
$this->bbcode_second_pass_quote('jeffvail', 'O')ther critical factors in European demand are the higher population density, tighter city streets, less of a "cowboy psyche" whereby big trucks are socially preferred, greater availability of mass transit for short AND long-distance trips, more of a green consciousness, etc. I'm not sure how much of Europe's different driving habits are due to the former, and how much is due to higher prices/taxes, but my opinion is that the former factors are more significant than price.
The oil barrel is half-full.
