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Living the diesel shortages in China - coming soon to a city near you

By David DuByne - posted Monday, 10 December 2007

Trucks are lining up in their hundreds at three stations in Chengdu, China, in the hope of getting 40 litres of fuel each. In this city of 10 million, only those three are still selling diesel. This may be an economics-induced dress rehearsal of the reality that will face the rest of the world in the post-peak oil universe.

Trucks lining up for diesel

I currently live in China and I hear the Chinese media speaking about diesel shortages, but the message they prefer to deliver is “take the shortages with a grain of salt”. International media are also covering the story of limited supplies, but what I have still not seen covered is the effect of limited diesel supplies on the economy and the population as a whole.


The story goes something like this: Inflation is out of control at 6.5 per cent and prices of everything have at least doubled in the last year and a half. Wages remain almost stagnant with no upward rise to match the inflation rate. Five years ago, when China’s economic boom started, dreams were alive in the air: a new car, a new apartment and a better life filled with possessions if you came to the cities and worked really hard. That is exactly what happened, a flood of workers came to man the factories, build new skyscrapers, and fill offices by the hundreds of millions.

The carrot dangled in front of 1.3 billion people was simple: come, work and be rewarded.

That was then, this is now. The dream is dying on the vine. A majority of Chinese citizens now realise that car ownership will not occur for them, same goes for the apartment. Property values are skyrocketing, from 2,500 yuan for a square metre in 2003, to 10,000 yuan for a square metre in today’s high-rises.

With unfulfilled dreams of car and home ownership, average workers trudge through their days knowing that the basic necessities and a night out on the town is all they will get in life. With inflation now running at 6.5 per cent what little income there was is being eroded, and the dreams of nights out at weekends are starting to disappear. Doubling food prices are making the country tighten spending and there is more grumbling from the average person on the street.

To highlight the social stress inflation is causing: “Stampede leaves three dead, 31 injured” is a headline that sums up the situation. Carrefour supermarket had a special on cooking oil which was discounted $1.55 from the regular $7 price. The promotion saw bargain shoppers lining up at the store entrance at 4am. When the doors opened at 8.40am, there was a stampede through the aisles. Fights over the bottles of oil began, and shoppers were pushed to the floor. Some were trampled to death.

Those that went to the hospital for injuries had bruises and gashes to the face, hands and forearms caused by other shoppers using cans as weapons to loosen the grip of those with bottles in hand, and retrieving dropped bottles. This incident is also a result of bio-fuel production interfering with food production and driving up cooking oil prices. Inflation is not the only cause.


It has been a culmination of lost dreams: minimal income, rising food prices and no end in sight for the rising costs of daily life. Last month’s 10 per cent rise in fuel prices was unpopular and added another nail in the coffin. Those who were able to afford cars within the last few years are now complaining about filling up the tank. Two years ago gasoline was 2.5 yuan per litre, now it sits at 5.8 yuan.

China’s national government sets fuel prices, and with the Olympics approaching they don’t want any civil disorder like that experienced in Myanmar after their fuel prices climbed. The illusion of a harmonious society needs to be maintained throughout the Olympics in order to generate more foreign investment.

A further rise in fuel prices of about 20-30 per cent will bring the refiners to the break even point when selling refined fuel in China, but it will also cause transport drivers to strike and the gentle old lady on the street corner selling roasted chestnuts to become a fire breathing dragon asking for change.

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First published in 321 Energy on December 4, 2007.

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About the Author

David DuByne is Chief Editor of and a consultant for companies distributing products into Myanmar as well as a sourcing agent for Myanmar agri exports. He can be reached through ddubyne (at)

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