The Hummer In Tiananmen Square: World Energy Crisis In A Tea Cup

SUV sales are at record levels in China. Driving one of the beasts is considered a status symbol, the way it used to be in the US. With gas at $4 a gallon, filling up a Lincoln Navigator can now cost a US citizen $100. He may need that money to buy the $80 box of Kellogg cornflakes.

According to the FT, "Although demand for SUVs is slumping in most parts of the world, it remains strong in China. Sales rose by 40 per cent in the first four months of the year."

Wealthy Chinese like to own the big trucks, but the wealthy can own them in China, the US, or Luxembourg. In the world’s most populated country, it simply costs less to run a car than it does almost anywhere else.

No matter what China would like to say about cutting the support it gives its oil companies to take expensive crude and make it into cheap gas and diesel, the popularity of the SUV is part of a more telling set of facts. China cannot afford to cut off the life blood to its truckers and car buyers. They mean too much to national GDP growth. China cannot export what it cannot move from the central part of the country to its port cities.

As long as gas is inexpensive in China, crude prices can still rise. The country is large enough to move the market by itself. For the time being, it can take oil at very high prices. It is part of the cost of having a rapidly growing economy.

But, it leaves the rest of the energy consuming world out in the cold.

Douglas A. McIntyre