Image source, Getty Images

Many petrol stations across China are now rationing diesel due to rising fuel costs and decreasing supplies.

According to Weibo posts, some truck drivers have to wait for fuel to fully charge up.

China currently faces a power crisis. Due to shortages of coal and natural gases, factories have been closed and homes left without electricity.

According to analysts, this new issue only increases the global supply chain crisis.

Mattie Bkink (China Director, Economist Intelligence Unit) stated: “The current diesel shortages seem affecting long distance transport businesses which could include products meant for markets other than China.”

“Depending on how intense and long-lasting this crunch is, it could very well contribute to global supply chain problems.”

Covid-19 has played a major role in the global supply chain crisis. With demand increasing as countries re-open, it is likely that this will continue.

  • The world is suffering from shortages
  • What could have happened to Christmas if it was in a shipping container?

China has a limit on the capacity of trucks to carry 100 litres. That’s about 10% according to one truck dealer who lives in Shijiazhuang province.

Reports indicate that rations in other areas of the country are tighter, with drivers being limited to buying 25 litres.

Meanwhile, in the city of Fuyang, about a seven hour drive south of the key transportation hub of Shijiazhuang, Caixin reports petrol stations are limiting purchases or charging drivers surcharges of up to 300 yuan ($47, £34) to fill up their tanks.

“After going to some…” [petrol]One Weibo user stated that stations will no longer have diesel. Prices will keep rising and big trucks operating logistics will be unable to refill.

Another person bemoaned inflation and the slowing of deliveries.

Do you feel that the food is getting more expensive, and express delivery has become slower? It’d be better to spend less money on 11/11,” refers to Alibaba’s Single’s Day. This day is typically the largest in China’s annual shopping calendar.

Aidan Yao is a senior emerging Asia economist with AXA Investment Managers. He said that while markets are well-aware of China’s lack of coal, the “diesel problem” is still a new one.

He said that all fossil fuels are experiencing a price revival lately because of the shortage in fuel resources, which has led to a lack supply when there is high demand.

Oil, gas and coal prices are all moving in sync, with the result that they have reached record levels.

In recent weeks, oil prices reached their highest level since 2014. This has caused fuel shortages across Europe and the UK.

A large part of the problem is due to a shortage in natural gas and coal supplies in China and India. As a result, analysts expect that users will switch to oil for heat and power generation.

This could increase crude oil consumption by over half a million barrels per day.

“This is merely a latest manifestation of shortages affecting China,” Jeremy Stevens (Chief China Economist, Standard Bank) told BBC Beijing.

He stated that companies have already turned to diesel-fuelled generators for power to keep factories open in times of crisis.

He said, “The energy crisis is at the heart of this matter.”

Both Mr Yao as well as Mr Stevens cautioned that the current crisis in power shows how dangerous it is to switch too rapidly to renewables.

He said, “The journey to net zero is dangerous and must be well planned.”

Wai Yee Yip also reports

Source: BBC.com

Share Your Comment Below

[gs-fb-comments]

LEAVE A REPLY

Please enter your comment!
Please enter your name here