National Petroleum News (NPN) has been the independent voice of the petroleum industry since 1909 as the opposition to Rockefeller’s Standard Oil. So, motor fuels marketing and retail is not just a sideline for us, it’s our core competency.
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a range of potential environmental concerns that need to be researched. In fact, it is telling that investment in many of these alternatives is stagnant today, when we have recently seen prices peak at $147 and often run above $30 per bbl. for extended periods. The reason is that the people looking to investments under- stand that such high prices are not reliable today and that those investments are currently very risky. Where the demand side of the equation is con- cerned, optimism about an uninterrupted and sus- tained growth in fuel use in China, India and other developing nations tends to overlook the enormous uncertainties behind those assumptions. The cur- rent unrest in the Middle East, a projected growth region, highlights that in a very clear manner. The unrest could break positively for economic growth, or have the exact opposite effect. The economic/social disparity in China is enor- mous, creating a significant potential for future unrest. According to a March 7, 2011, article in China Daily, 150 million people live below the United Nations’ poverty line of one dollar a day. That rep- resents about half the population of the United States. The article noted that the World’s Children report by the United Nations Children’s Fund placed China’s national income per capita in 2008 at $2,770, which is the same as, if not lower than, the average for all developing countries worldwide. People living on $1 a day are exposed to the growing www.npnweb.com NPN Magazine middle and upper classes that have extraordinary wealth by comparison. And at the same time, many of the protections and personal security the poorest Chinese enjoyed under the traditional Communist system—the Iron Rice Bowl—have disappeared. Will China be able to navigate what will invariably be a growing sense of class resentment? Similarly, the Chinese economy while appearing to be an economic tiger by some economists and pundits is also seen as being shaky and question- able by other economists. Economically, the Chinese manufacturing-econ- omy is currently beholden to western consumption which is uncertain.And,as wealth expands in China, the manufacturing economy with all of its fixed costs is vulnerable to competitors that can produce cheap- er. There are real estate bubbles. There is the central- ized government management which can at times be effective in handling crisis situations, but that breeds inefficiencies and corruption. On the practical side of things, the current growth in Chinese automobile ownership, and its concentration in specific urbanized areas, has already overwhelmed the transportation infra- structure. There have been recent traffic jams that are measured in days— not hours. As much as the affluent Chinese would like to own an automobile and enjoy an American-style open road, it simply might not be practical. Similar challenges exist in India and the rest of the projected high growth regions. So, as with sup- MARCH 2011 15