Now that the price of gas has hit $3.50 per gallon in China, will the Chinese drop their love affair with the SUV and other gas guzzling vehicles?
SUV sales have been going up and up in China for the past few months, as can be seen in this article:
No one in the U.S. can afford an SUV because the gas is too expensive. But in Beijing, they are driving through the streets in Navigators and Hummers.
The news is a perfect tale of the differences in the two countries. According to the FT, “many of the new buyers of SUVs in China are more interested in social status than miles per litre.” That misses the point.
In China, the central government still underwrites the cost of gas and diesel by allowing the country’s oil companies to buy crude at $130 a barrel and not pass the cost along to consumers and businesses. The government writes a check to make up the difference for its large oil firms. By doing this, China allows its economy of trucking and car sales to flourish. In the U.S., people can barely afford gas.
The broader and more disturbing story is that as long as China is willing to keep gas cheap, consumption will continue to rise. That is likely to help keep crude high.
The fellow sitting in the big SUV by Mao’s tomb is pushing up the price of oil, even if he doesn’t know it.
“The broader and more disturbing story is that as long as China is willing to keep gas cheap, consumption will continue to rise. That is likely to help keep crude high.”
The above statement may be true but I am willing to bet you there are millions more owners of large SUV’s and pick-up trucks like the Ford F-150 and Chevy Silverado in the USA that are consuming much more gas than the new SUV owners in China.
Gasoline or crude oil prices are driven up in price by mostly western speculators using futures contracts. Your very biased article makes it seem like China alone is responsible for high oil prices. There are other developing countries like India that also consuming more gasoline. And rightly so. Gasoline is not for the exclusive us of western countries or people.
c240,
I do agree with you, Chinese consumption of oil is actually very small, and half of their consumption is domestically produced oil!
“In the U.S., people can barely afford gas.”
Wow, I didn’t know that! I better go home and see. They must be protesting like the did in India and Burma.
Americans havent protested properly since the 60’s!