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Friday, December 9, 2022

China Begins to Ration Diesel Amid Fuel Shortages

In several places of China, petrol stations have begun limiting diesel due to rising costs and dwindling supply.

According to tweets on the social media site Weibo, some truck drivers are having to wait days to refill.

China is now experiencing a huge power shortfall as a result of coal and natural gas shortages, which have forced enterprises to close and people to go without electricity.

Analysts believe that this additional issue would just add to the current global supply chain turmoil.

“The present diesel shortages appear to be harming long-distance transportation operations, which may include items destined for markets outside of China,” Mattie Bekink, China Director at the Economist Intelligence Unit, said.

“We might see this contribute to global supply chain difficulties depending on the duration and intensity of this crisis.”

The Covid-19 epidemic has been a major driver of the worldwide supply chain issue, with demand growing as economies reopen.

Trucks in China are only permitted to fill up to 100 litres apiece, or roughly 10% of their capacity, according to a truck trader from Shijiazhuang, Hebei province.

According to accounts, rationing is considerably tighter in some regions of the nation, with vehicles only able to purchase up to 25 gallons.

Meanwhile, Caixin says that gas stations in Fuyang, around a seven-hour journey south of the main transportation hub of Shijiazhuang, are restricting purchases or charging vehicles up to 300 yuan ($47, £34) to fill up their tanks.

“There is no more diesel after traveling to a few [petrol] stations,” one Weibo user commented. “Prices will continue to grow, and massive trucks doing logistics will not be able to refill.”

Another expressed dissatisfaction with the impact on inflation and delivery.

“Do you have the impression that food is becoming more costly and that rapid delivery is becoming more difficult? On 11/11, it would be preferable to purchase less “referring to Alibaba’s Single’s Day, which is often one of the busiest shopping days in China.

The Source Of The Shortage

While the market is well aware of China’s coal shortfall, Aidan Yao, a senior emerging Asia economist at AXA Investment Managers, told reporters that the “diesel problem is fresh.”

“All fossil fuels have seen a price renaissance recently as a result of underinvestment in these fuel sources, which has resulted in a supply shortage at a time when demand is increasing,” he added.

“Oil, gas, and coal prices have all risen in lockstep and are now at all-time highs.”

In recent weeks, oil prices have risen to their highest levels since 2014, exacerbating gasoline shortages in regions like Europe and the United Kingdom.

Part of this is due to coal and natural gas shortages in countries like China and India, which researchers anticipate will lead to a shift to oil as a source of electricity and heat.

This demand might result in an increase of more than half a million barrels of oil per day in global crude consumption.

“This is only the latest expression of China’s shortages,” Jeremy Stevens, Standard Bank’s Chief China Economist, told reporters in Beijing.

Companies are already using diesel-fueled generators to keep their facilities running during the power outage, according to him.

“The heart of the situation is the energy crisis,” he stated.

Both Mr. Yao and Mr. Stevens emphasized that the recent power outages demonstrate the perils of a hasty transition to renewables.

“The road to net zero is perilous, and the voyage must be well planned,” Mr Yao added.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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