Life's a Gas
I really didn't want to write a post about the gas prices in the US right now because I always say they are what they are, especially now. However, in an odd coincidence with all the emails flying and the talk in the news about the U.S. gasoline prices and the shortages, real and imagined, Randy told me about the gasoline situation in ShenZhen.
I was on the phone with him when he was describing in amused disbelief a group of people that were pushing a car up the expressway. And the thing was, it ended up not being the last time he saw that that day. People are running out of gas everywhere, just like we have on I-55 in Mississippi right now, but he is seeing a lot of people pushing their cars. ShenZhen as well as many other parts of China are experiencing gasoline shortages. However, the reason has NOTHING to do with supply or distribution, or rather is has nothing to do with availability of supply.
The Chinese government dictates the price of gas for the entire nation. Sounds like a great idea to us who right now could be seeing anything from $3 to $5 a gallon, right? The odd thing, though to me, is that the Chinese government does not involve itself in setting the price from the suppliers (I would have assumed that the Commerce Ministers or whatever would negotiate the supply contracts with the oil companies). So while they will guarentee the consumers will pay X at the pump, they allow the suppliers to the gas stations to charge market pricing. Sometimes, the cost to the gas stations is at or above the selling price. On those occassions, a lot of fill-up stations do not buy as much gas as they would when the cost to them is in line with allowing them some profit, and when that happens, they often run out until the market price drifts back down below selling price.
For the past few days Randy has had to take a cab to work because the company van is out of gas and there is no gas to be had in that area. In case you weren't aware of this, the foreign workers in China are typically prohibited from driving in China, so these companies end up employing a driver to escort the foreigners to and from work.
I was on the phone with him when he was describing in amused disbelief a group of people that were pushing a car up the expressway. And the thing was, it ended up not being the last time he saw that that day. People are running out of gas everywhere, just like we have on I-55 in Mississippi right now, but he is seeing a lot of people pushing their cars. ShenZhen as well as many other parts of China are experiencing gasoline shortages. However, the reason has NOTHING to do with supply or distribution, or rather is has nothing to do with availability of supply.
The Chinese government dictates the price of gas for the entire nation. Sounds like a great idea to us who right now could be seeing anything from $3 to $5 a gallon, right? The odd thing, though to me, is that the Chinese government does not involve itself in setting the price from the suppliers (I would have assumed that the Commerce Ministers or whatever would negotiate the supply contracts with the oil companies). So while they will guarentee the consumers will pay X at the pump, they allow the suppliers to the gas stations to charge market pricing. Sometimes, the cost to the gas stations is at or above the selling price. On those occassions, a lot of fill-up stations do not buy as much gas as they would when the cost to them is in line with allowing them some profit, and when that happens, they often run out until the market price drifts back down below selling price.
For the past few days Randy has had to take a cab to work because the company van is out of gas and there is no gas to be had in that area. In case you weren't aware of this, the foreign workers in China are typically prohibited from driving in China, so these companies end up employing a driver to escort the foreigners to and from work.
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