Chengdu / Phil

The Fuel Gauge Drops Past E

China is currently facing country-wide shortage of diesel. The problem is standing on three legs: first a very ambitious target set during the 11th Five-Year-Plan meant to reduce the consumption of energy used to produce the GDP; second China’s allocate of stimulus money to pay for energy intensive projects requiring steel and concrete; and finally, the Machiavellian belief that meeting ones numbers is all that matters.

Net result? School buses are being limited to single runs due to rationing. Trucking charges are on the rise. Lines at petrol station lines snake around blocks so drivers can buy a quarter of a tank and continue earning their living. Why?

In 1953, following the example of the Soviet Union, the CCP, Chinese Communist Party, released their first 5-year plans. The CCP, like the Soviets, believed that only by the guiding hand of the Central government could the country advance towards greatness. Unfortunately the track record of the 5 Year Plans is not encouraging. Despite that, in 2005 the 11th 5-year-plan included a goal most Western analysis would approve of: reducing “energy consumption per unit of GDP [by] 20 percent in five years.”

Fast forward to 2009, add Sichuan’s devastating 2008 earthquake, a financial crisis and the belief that anything under 8% increase in China’s GDP will trigger riots and you get the breakdown of China’s CNY 4 trillion (USD 585 billion) stimulus package. China’s rapid development of infrastructure has been a part of every five year plan since 1953  is one of the reasons for the constantly high growth rate production is a energy intensive processes.

Fast forward to today. At the start of 2010 China had reduced energy consumption by 15.6%. Half way through the year the reductions had inverted and the energy per unit of GDP increased by .09%. Determined to meet the 11th 5 year plan target Beijing now requires the local governments meet those goals. This has resulted in rolling black outs and rationing of energy preventing factories from running at full capacity. Businesses have responded by buying diesel powered generators. The increased stress on the diesel powered generators (which are more harmful than the coal powered power plants), combined with the fire in the Dalian oil refinery and like that you run out of diesel.

Now here we are with a diesel shortage…

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