China is announcing to the world (see AFP story) that it will NOT INCREASE OIL IMPORTS due to the impact of the recent earthquake swarm. How utterly, totally responsible of them!

Whoah! Say hello to oil price moderation, if not a slow retrenchment in oil prices. (Is the Fed listening?)

Actually, if this news gets the play it deserves the price of oil ought to sell off by $20 or so per barrel. This pops the bubble.

Seriously. Knock-knock. Who’s there? POP!

The initial energy-speculation on earthquake-related oil demand was based on the fact that hundreds of Chinese dams were damaged by the earthquakes. So hydro-electric power output is down. And the thinking was that China would burn diesel to spin generators. But you just cannot apply conventional thinking to those Chinese. Very inscrutable, no? (Remember the Korean War? No, the Chinese would not cross the Yalu River to fight the American Army, right?)

The Chinese have a way of surprising the world. The reality is that overall electric demand is down in China because of damage to infrastructure. Collapsed buildings and factories do not use electric power.

So with candor verging on the astonishing, China says “no.” China will not increase oil imports.

Also, someone in China must be looking at the import bill for oil at $130 or so, and determining that China has to use oil more efficiently. Especially since China subsidizes fuel at the pump. Chinese consumers do not pay the “world price” for fuel. The difference comes out of the hides of Chinese oil companies, plus the Chinese government. As Mr. T used to say, “The word is ‘pain.’”

Well, China works hard for its money. And the top leaders evidently want to quit spending so much on foreign energy sources. Especially since they have to pay for the oil twice… once to import it, and again to subsidize its use.

As the story below quotes the deputy director of the National Development and Reform Commission, “Now with oil prices so high, it would be unwise to continue increasing the import of oil. It’s a better approach to adopt even more energy-saving measures.”

As for where China is going in all of this… It’s not as if there is a lack of energy-efficiency technology in this world. Really, if there was never another patent issued in any field of energy-related technology — just shut down all research on new ideas — we could spend the next 50 years or so just adapting the existing technology base to transforming the energy systems of the world. The Chinese know this.

R&D for new stuff is good, but the big challenge for the world is systems integration of what is already discovered. The richest energy-mines are in the technical journals on the shelves of the world’s libraries. The Chinese know this as well.

So this news embodies many different levels of importance. But the news is entirely good.

Until we meet again

Byron King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Source: China Isn’t Increasing Oil Imports

Crude prices jumped on Monday in electronic trading as news of the attack broke, but analysts said the impact on prices spilled over into Tuesday, when exchanges on both side of the Atlantic re-opened after the long weekend.

“Is it demand? Is it speculation? Is it OPEC punishing George Bush for the war in Iraq?” asks Dan Denning in The Daily Reckoning Australia. “OPEC thinks there’s plenty of oil. It’s the declining U.S. dollar that’s to blame. OPEC says that for every one percent decline in the dollar oil rises by US$4, and vice versa.

“The solution to high oil prices, then, is not increased supply or reduced demand, but a stronger U.S. dollar! Well, there is certainly some truth to that, but it is not likely to happen any time soon. As a tangible good whose supply cannot be increased by a central banker, the oil price (a little like the gold price) tells you there’s too much paper money chasing too little stuff.”

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“But times have changed… And the new gold rush is on.

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Read on here to find out how to cash in on the tar-sands “black gold” rush with this oil mining company.