the visible hand

it is the theory which decides what can be observed – einstein

Oil falls on report that China will lift subsidies

Posted by ecoshift on June 19, 2008

Interesting.  China’s access to US markets is measured, at least in part, in transportation costs.  Plus, China just gave alternatives a boost in fueling Chinese production.  Given the recent rumblings about Iran you can understand why they might be concerned about their dependence on foreign oil and willing to make sacrifices to encourage alternatives.  Undercuts any transportation cost advantages that might accrue to US domestic manufacturing in US markets as well.

Oil falls on reports that China will lift subsidies – Jun. 19, 2008
Crude prices shed nearly $3 amid reports that China will raise fuel prices.
By Ben Rooney, CNNMoney.com staff writer
June 19, 2008: 10:24 AM EDT

NEW YORK (CNNMoney.com) — Oil prices fell nearly $3 Thursday amid reports that the Chinese government is lifting subsidies on gasoline and diesel in a move that could curb demand from the country’s rapidly growing economy.

Light, sweet crude for July delivery was down $2.89 at $133.70 a barrel on the New York Mercantile Exchange.

“The news out of China sold the market off,” said Dan Flynn, a market analyst at Alaron Trading in Chicago.

Strong demand from China’s booming economy has helped support crude prices in recent years. But a change in the government’s policy of subsidizing gas and diesel prices could mean higher gas prices for Chinese consumers and undercut that demand.

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