China’s oil firms export all they can

Sep 29, 2005 02:00 AM

Known widely for its porcelain, this grimy city in southern China is the source of much of the world’s tiles and bathroom fixtures. Yet many factories have shut down in recently. In Guangdong, the heart of China’s industrial boom, manufacturers cannot find enough fuel to keep their operations going.
Trucks hauling wares stop frequently looking for diesel, as roughly one-fourth of the service stations in Guangdong are closed for lack of gas. The others are rationing fuel to cope with lines snaking into the street. Taxi drivers queue at midnight, just before tanker trucks come to replenish the stock.

In addition to the hurricane-lashed Gulf of Mexico, China is grappling with oil shortages of its own making.
Demand for gasoline and diesel in China is propelled by the market, as factories expand and cars proliferate, yet the state controls retail prices to limit inflation. This has encouraged China’s oil firms to export all they can to take advantage of higher prices elsewhere, even as the country remains a net oil importer, relying on foreign stocks for about one-third of its consumption.

In the first seven months of the year, China’s exports of oil products like gasoline leapt by more than 45 %. Crude oil exports jumped by nearly 30 %, even as Chinese companies search the globe for new sources as part of a state-mandated energy-security initiative.
‘‘Our firms want to export to make dollars, so we don’t have any oil,’’ said Huang Caixin, a sales representative at Zhipeng Ceramics, which makes bathroom and kitchen tiles. “We’re cutting production, and our profits are down. Almost every factory here is running at less-than-full capacity.’’

Seeking to plug the gap, the government on September 1 announced that oil firms could not sign new export contracts.

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