The small, locally own oil refineries in China called “teapots” revolted when the government froze gasoline prices. Since they couldn’t make money with the new pricing because the price of crude was rising, they simply switched to producing non-regulated products.
They didnÃ¢â‚¬â„¢t have to wait long to bring the mighty Chinese economy to its knees.
Shortages broke out, the government was forced to raise the oil price cap, and ramped up production hugely at their mammoth state-owned facilities and canceling maintenance.
As we in America should know by now, delaying refinery maintenance will come back to bite. Whether a 10 percent increase in retail prices will be enough to slow consumption and encourage increased production remains to be seen.
Interesting, isn’t it, that in a nominally communist county with 85% of the refinery capacity owned by the government, that the little capitalist teapots have such a profound effect?
In a few years, the Chinese will be selling themselves 10 million new cars a year.
Someday soon we in America will be facing shortages, gas lines, and rationing.
The chances are the revolt of the teapots is a harbinger of things to come.