The Chinese government has banned the exports of Diesel, but the implications still continue to grow through out their economy. Electricity demand has continued to grow at double digit levels, while supplies has hit a hiccup.

The heavy rains of December in Australia unleashed a series of events, each of which has its own impact on the Chinese Economy.

The drought, which has seen no rainfall for two months, has struck the central Chinese provinces that are known as the country’s “home of rice and fish”.

Almost half of all the country’s rice fields have been affected and four million people do not have access to drinking water.

At Honghu Lake, in Hubei province, fish farmers have seen 80 per cent of their stocks die. “More than 20,000 acres of fish farms have been severely damaged,” said Zou Haibin, the local Communist party secretary in Dianhe, to Xinhua.

  • The shift in Rain Patterns has left China in a Drought, with a drop in Hydro Generation
  • The Shift in Rain Patterns left China with out high BTU coal to sweeten their low grade supplies.
  • The increase in Crack Spreads caused Russia to change its Diesel Export Tax, lowering exports.
  • Japan has been importing increasing levels of hydrocarbons, to offset their lack of Nuclear supplies.

Coal plants are running at lower capacity levels, while hydroelectric sources are down by 20%.  This leaves China needing to import Diesel products, if it is going to redivert what water supplies it has has available.

BEIJING May 30 (Reuters) – China’s fuel supplies are expected to remain tight in June due to strong seasonal consumption coupled with additional demand from diesel-fired power generators amid ongoing power shortages, a report by the National Development and Reform Commission (NDRC) showed on Monday.

“Even though falling crude oil prices in May lowered operational costs for refiners … (We) are not optimistic about domestic fuel supply in the second quarter,” the commission said in the report on its website (www.ndrc.gov.cn).

The unstoppable growth economy has ran into the unmovable wall of energy needs.  The more their economy tries to grow from here, the more obvious their reality is that they are hostage to the supply of BTU’s in some form or another.

While small factories can provide localized electricity supplies, the largest factories need direct access to stable supplies of electricity.  This leaves China in a situation where it is trying to increase its value added services, while freeing up the most wanton energy consumers.

The drought in China has caused the great Yangtze river to dry up enough that the 3 Gorges Dam has had to unleash some of its precious horde of water, to re float sections of the river bed.  A total of 2,000,000 Olympic swimming pools worth will be unleashed over the next couple of weeks.

The great experiment in controlled growth is running into reality based supply constrictions, what happens next is open to debate. What say Ye?