China Is Rationing Diesel Because Of Fuel Shortages

In several parts of China, petrol stations have begun limiting diesel purchasess by customers due to rising costs and dwindling supply. According to tweets on the social media site Weibo, some truck drivers are being forced to wait for days to refill their tanks.

A huge power shortfall as a result of coal and natural gas shortages is now being experienced by China, and this has forced companies to close and households to go dark.

According to analysts, the existing global supply chain crisis would be exacerbated by this latest issue.

“The current diesel shortages seem to be affecting long distance transportation businesses which could include goods meant for markets outside of China,” said Mattie Bekink, China Director at the Economist Intelligence Unit.

“Depending on the duration and intensity of this crunch, we could well see this contribute to the global supply chain challenges.”

The Covid-19 epidemic has been a major contributor to the worldwide supply chain issue, with a rise in demand because of the reopening of economies.

According to a truck dealer in Shijiazhuang, Hebei province, who spoke to the Chinese business news agency Caixin, trucks in China are only permitted to fill up to 100 litres, or roughly 10 per cent of their capacity.

According to reports, there is even tighter rationing being imposed in some regions of the nation, with drivers being permitted to purchase only up to 25 litres.

According to Caixin, sales are being restricted or fees are being charged from drivers of up to 300 yuan ($47) for filing up their tanks in gas stations in Fuyang, around a seven-hour journey south of the main transportation hub of Shijiazhuang.

“After going to a few [petrol] stations, there is no more diesel, and prices will continue to rise, and large trucks running logistics will not be able to refuel,” one Weibo user wrote.

Inflation and deliveries were pointed out as the factors by another Weibo user.

“Do you get the feeling that food has become more expensive and the express delivery is slower? It would be better to buy less on 11/11,” referring to Alibaba’s Single’s Day, typically one of the biggest days of the year in China’s shopping calendar.

While the coal shortage issue is known to the markets, the “diesel problem is new”, said Aidan Yao, a senior emerging Asia economist at AXA Investment Managers.

“All fossil fuels have seen a price renaissance lately as the underinvestment in these fuel sources has created a shortfall of supply at a time when demand is surging,” he said.

“Oil, gas, coal prices have all moved in tandem and are through the roof.”

In recent weeks, oil prices have reached their highest levels since 2014, exacerbating fuel shortages in regions such as Europe and the United Kingdom.

Part of this is due to coal and natural gas shortages in nations such as China and India, which analysts anticipate will lead to a shift to oil for power generation and heating.

Such demand might increase global crude consumption by more than 500,000 barrels of oil per day.

“This is merely the latest manifestation of shortages impacting China,” Jeremy Stevens, Chief China Economist at Standard Bank said.

(Adapted from BBC.com)



Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability

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