Where's The Demand Destruction?
China released its monthly crude oil import figures this morning, and the results show that even with oil hitting record highs, imports during May reached their second highest levels on record.
So weren't higher oil prices supposed to hurt demand? While there has been some demand destruction in the US, the figures above suggest that China keeps on chugging. However, as we know, one explanation for the lack of demand destruction in China is because the government has controls on the price of gasoline. These price controls have gotten so expensive for Chinese oil companies that PetroChina announced an $8.7 bln bond offering this morning. The purpose of the offering was to cover losses from its refining operations due to price controls.
What about the Chinese gov't stockpiling energy so they don't have any blackouts over the summer for the Olympics?
Posted by: Steven Place | June 11, 2008 at 10:56 AM