With China holding the United States’ future and currency in the palm of its hand, it shouldn’t be too surprising that a shift in what they do over there would cause major tremors over here in North America. So when China announced that they were raising gas prices, the tremors felt over here were instant, bold, and compelling.
For starters, the oil prices sank like a stone. This major shift came as China announced Thursday that it was going to lift subsidies that have been blamed by experts for driving oil prices higher. The move will likely curb demand from China’s rapidly growing economy.
Crude oil for July delivery fell $4.75 to settle at $131.93 a barrel on the New York Mercantile Exchange as a result. China’s National Development and Reform Commission said that prices of gasoline, diesel and aviation fuel will increase by 8% beginning Friday. The reaction of United States markets to this shift will likely be sudden and sweeping.
The news came as a shock to many analysts, who had expected China to simply follow the lead of other oil consuming countries that have lifted subsidies in recent weeks. The idea that the shift comes in the weeks before the Olympics seems to have added insult to injury in the minds of many brokers. Nevertheless, the markets will be interesting to watch on Friday.
Strong demand from China’s economy regarding crude oil and gas has been a driving force in the markets. While much of the United States’ attention has been on the Middle East, it has been China that has been driving a lot of the prices. American investors would do well to have a broader global perspective in dealing with the markets.
As for the local consumers, changes are always in order when something like this happens. This news not only reinforces the idea that America’s fuel markets are being played by other puppets, but it also reinforces the idea that Americans need to take their own power back. That means driving smarter and using more fuel-efficient vehicles.
Start by dropping by a Scion dealer and looking at a more fuel efficient car. You’ll be glad you did and, you never know, you’ll probably even feel more American…
