{"id":99,"date":"2012-06-13T16:51:40","date_gmt":"2012-06-13T16:51:40","guid":{"rendered":"http:\/\/www.chinaoiltrader.com\/?p=99"},"modified":"2012-10-04T16:53:30","modified_gmt":"2012-10-04T16:53:30","slug":"chinese-drivers-now-pay-roughly-one-dollar-more-per-gallon-for-gasoline-than-u-s-drivers-do","status":"publish","type":"post","link":"http:\/\/www.chinaoiltrader.com\/?p=99","title":{"rendered":"Chinese Drivers Now Pay Roughly One Dollar More per Gallon for Gasoline than U.S. Drivers Do"},"content":{"rendered":"

Gabe Collins, \u201cChinese Drivers Now Pay Roughly One Dollar More per Gallon for Gasoline than U.S. Drivers Do<\/span><\/a><\/strong>,<\/strong>\u201d China Oil Trader\u2122, No. 4 (13 June 2012).<\/span><\/p>\n

INSIGHTFUL AND ACTIONABLE ANALYSIS OF CHINA\u2019S OIL & GAS SECTOR.<\/strong><\/span><\/p>\n

As U.S drivers hit the summer holiday road and grouse about gasoline prices of roughly US$3.57 per gallon, drivers in China are paying roughly US$1 more per gallon for gasoline and 40\u00a2 more per gallon for diesel fuel. The Chinese government\u2019s price setting timetable used to lag U.S. prices but now more frequently updates fuel price guidelines in response to global oil price movements.<\/span><\/p>\n

The Chinese government\u2019s suggested retail prices for gasoline and diesel now closely track the U.S. monthly average, an important step govern that the U.S. is one of the world\u2019s more market-based motor fuel price benchmarks with its the lower fuel taxes and paucity of motor fuel subsidies relative to markets elsewhere in the world (Exhibit 1<\/strong>). This suggests the NDRC may now be purposely building in a premium that will keep oil demand growth\u2014and China\u2019s oil import dependency\u2014in check.<\/span><\/p>\n

Exhibit 1: China vs. U.S. retail gasoline prices<\/strong><\/span><\/p>\n

Monthly average price, USD per gallon<\/span><\/p>\n

\u00a0\"\"<\/span><\/a><\/span><\/p>\n

Source: EIA, NDRC, ORNL, C1 Energy, China Daily, Xinhua, X-Rates<\/span><\/p>\n

Exhibit 2: China vs. U.S. retail diesel fuel prices<\/strong><\/span><\/p>\n

Monthly average price, USD per gallon<\/span><\/p>\n

\u00a0\"\"<\/span><\/a><\/span><\/p>\n

Source: EIA, NDRC, ORNL, C1 Energy, China Daily, Xinhua, X-Rates<\/span><\/p>\n

We would love to see the NDRC provide data on miles driven per year by China\u2019s drivers so that we could get a better sense of how price sensitive Chinese car owners are at the pump. Our suspicion is that because cars are still a luxury status symbol in China, as opposed to the U.S. where rich and poor alike are more likely to rely on personal cars as a primary mode of transportation, Chinese drivers are less sensitive to changes in fuel prices.<\/span><\/p>\n

Although the drivers in China may be less price sensitive than U.S. car owners on a \u201cgasoline to gasoline,\u201d\u00a0 \u201cdiesel to diesel\u201d basis, it is useful to consider the price differences per million BTU between various potential motor fuels in China.\u00a0 Compressed natural gas (CNG) and liquefied natural gas (LNG) are catching on quickly in China and vehicles can be converted more easily and cheaply to run on these fuels than they can in the U.S.<\/span><\/p>\n

Currently, #93 gasoline is selling for US$35.71 per million BTU and #0 diesel fuel for US$30.46 (Exhibit 3<\/strong>). CNG sells for roughly half this price per million BTU, while the LNG that fuels large trucks now sells for 37% less than diesel fuel.<\/span><\/p>\n

\u00a0<\/strong>Exhibit 3: China motor fuel costs per million BTU, 7 June 2012<\/strong><\/span><\/p>\n

USD per million BTU<\/span><\/p>\n

\u00a0\"\"<\/span><\/a><\/span><\/p>\n

Source: ENN Energy, China Oil Trader\u2122<\/span><\/p>\n

The substantial price differences between the gas fuels and oil-based fuels may drive more CNG or LNG conversions on the margin, especially for fleet vehicles such as taxis. In the US, such high diesel prices would drive more freight traffic to the railroads, but China\u2019s rails are already loaded up with coal trains and have less potential for expansion.\u00a0 Also tunnel height constraints put a crimp on the ability for railroads to employ intermodal container shipping in a cost-effective way.<\/span><\/p>\n

\u00a0<\/em><\/span><\/p>\n

About Us<\/strong><\/span><\/p>\n

China Oil Trader\u2122 founder Gabe Collins grew up in the Permian Basin and has a deeply rooted enthusiasm for the petroleum industry. He speaks and reads Mandarin, Russian, and Spanish. Gabe has published numerous oil and gas analyses in outlets including\u00a0Oil & Gas Journal,\u00a0The Naval War College Review,\u00a0Orbis,\u00a0Geopolitics of Energy,\u00a0Hart\u2019s Oil and Gas Investor,\u00a0The National Interest, and The Wall Street Journal China Real Time Report. Gabe also co-founded the\u00a0www.chinasignpost.com<\/span>\u00a0analytical portal. He can be reached at gabe@chinaoiltrader.com<\/span>.<\/em><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Gabe Collins, \u201cChinese Drivers Now Pay Roughly One Dollar More per Gallon for Gasoline than U.S. Drivers Do,\u201d China Oil Trader\u2122, No. 4 (13 June 2012). INSIGHTFUL AND ACTIONABLE ANALYSIS OF CHINA\u2019S OIL & GAS SECTOR. As U.S drivers hit the summer holiday road and grouse about gasoline prices of roughly US$3.57 per gallon, drivers […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,5],"tags":[18,12,13],"class_list":["post-99","post","type-post","status-publish","format-standard","hentry","category-oil-consumption","category-refining-transport-storage","tag-oil-consumption","tag-refining","tag-transport-storage"],"_links":{"self":[{"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=\/wp\/v2\/posts\/99","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=99"}],"version-history":[{"count":0,"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=\/wp\/v2\/posts\/99\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=99"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=99"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.chinaoiltrader.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=99"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}