China's resurgence as a global superpower has not come without its hitches. Presently, amidst its rapid economic expansion, China is rationing electricity as it rushes to meet the aggressive goals it set for energy reduction, effectively causing a diesel shortage throughout the country.
By cutting electricity to its citizens, China has created a huge shift in demand for energy. Over the last ten years, a burgeoning middle class has emerged in China, one that depends on electricity to power the electronics, cars and other consumer goods it is widely consuming. Furthermore, a building boom, requiring massive amounts of energy, relies on that energy. However, because of the energy cutbacks, the price of diesel has skyrocketed, with refineries at full capacity and supply chain inefficiencies causing country-wide slowdowns in business.
KF Yan, research director at consulting group Cera, told the Financial Times that the "primary reason for the diesel shortage is that they cut power supply to a lot of industries." Fearful of inflationary pressures, the Chinese government has not raised diesel prices. This measure has prompted some businesses and traders to hold onto their diesel stocks in hopes the price will rise, triggering further price escalation.
Because of its energy reduction goals, China stands to hurt its businesses and consumers as energy prices rocket higher.
By cutting electricity to its citizens, China has created a huge shift in demand for energy. Over the last ten years, a burgeoning middle class has emerged in China, one that depends on electricity to power the electronics, cars and other consumer goods it is widely consuming. Furthermore, a building boom, requiring massive amounts of energy, relies on that energy. However, because of the energy cutbacks, the price of diesel has skyrocketed, with refineries at full capacity and supply chain inefficiencies causing country-wide slowdowns in business.
KF Yan, research director at consulting group Cera, told the Financial Times that the "primary reason for the diesel shortage is that they cut power supply to a lot of industries." Fearful of inflationary pressures, the Chinese government has not raised diesel prices. This measure has prompted some businesses and traders to hold onto their diesel stocks in hopes the price will rise, triggering further price escalation.
Because of its energy reduction goals, China stands to hurt its businesses and consumers as energy prices rocket higher.
Post A Comment:
0 comments so far,add yours