[misterno]

From the article linked below

http://blogs.hbr.org/cs/2011/10/there_w ... n_you.html

We know that the economy fell on its face at $147 per barrel in 2008, and brought growth to a halt in 2011 at $120. The new pain tolerance limit appears to be $90 in the U.S., but $100-110 in China. At the same time, it costs $80-90 to bring a new barrel of supply online from marginal resources such as deepwater, tar sands, and the Arctic.

So why do you think China's pain tolerance limit higher than USA? Given the huge difference in income levels, I think the writer meant to say the other way around. So what do you think?

[Sixstrings]

Firstly, what does China pay for oil. Is it necessarily the same as us or do they cut better deals / cheaper prices from Iran or rogue states.

Second.. they drive smaller cars

Third.. still lots of bikes, scooters

Fourth.. I think their gov subsidizes gas prices?

Fifth.. they have a big middle class now that's not so poor, as big as our entire population, 300 million people.

[seenmostofit]

They don't have the rare luxury of spending a good part of their waking hours stuck in traffic jams?

Oh, they are progressing quite well I think. Beijing is a wonderful place!

[rangerone314]

They don't have the rare luxury of spending a good part of their waking hours stuck in traffic jams?

Oh, they are progressing quite well I think. Beijing is a wonderful place!

That is the kind of stuff I would have bad dreams about!

[dolanbaker]

China is mainly coal powered, so less dependent on oil. It's also in their interests that the "the West" is slowed down by high prices, it helps them to consolodate their new position as the "Prime" country in the world.

[FarQ3]

I think China actually pay MORE for oil than the USA as they are importing Tapis and Mid east crudes whereas WTI is among the cheapest crude now. Also Chinas 1.3b people are more used to tighter economic conditions and having to live with less. China's oil use is less than half what the USA uses from memory so the US citizens use way more per head of population.

[SeaGypsy]

Firstly, what does China pay for oil. Is it necessarily the same as us or do they cut better deals / cheaper prices from Iran or rogue states.

Second.. they drive smaller cars

Third.. still lots of bikes, scooters

Fourth.. I think their gov subsidizes gas prices?

Fifth.. they have a big middle class now that's not so poor, as big as our entire population, 300 million people.

How can they have a middle class 0f 300 million with an economy 1/5th your size? Answer/ They don't, it's BFS. Middle class as defined by having running hot/ cold water, lights most of the time, a TV, a scooter and a car which is shared among 5 people and still hardly used. They can do this on $10 a day. Not much more than food stamps in th USA.

[Tanada]

IIRC the majority of the oil consumed by PRC is still extracted inside PRC, this makes world price only effect a small portion of their state controlled refinery inputs. If the USA mainly burned 80% of oil from USA and only 20% imported the world price would have a more limited effect on our economy as well.

[Pops]

Even though I predicted last year that the threshold price that stalls the economy would fall from $147 to $120 to $100 I'm not sure it's clear that $90 oil kills the US economy as the article claims.

I'd just point out that the Composite Acquisition Cost paid by US refiners (the average price paid for all oil consumed, foreign and domestic) has been over $100 since March 2011 (except the 2 months last summer it was $97 & $99) and the latest reading as of March is $109.19.

http://205.254.135.7/dnav/pet/hist/Leaf ... 0____3&f=M

--

But on the original question, the ability to purchase a small amount of oil can have a large positive effect on the lifestyle a persons who previously had no oil. But for a person who consumes a large amount of oil, a small reduction isn't that big an impact. So to the small user each gallon is much more valuable than to the larger consumer.

[SeaGypsy]

Pops has nailed the main part, Tanada's point also and another- Public Servants in China get paid peanuts by comparison to those in the west. We all have giant lecherous and expensive bureaucracies. The only way to get rich in China is entrepreneurism, whichever shade of gray.

[Cog]

I think we are seeing a lag effect on the higher oil prices in the US. About six months of lag to my way of thinking. 4th Quarter 2011 GDP came in a 3% and 1st quarter GDP 2012 at 2.2%.

I'm still going to maintain that over $100 oil blended price of WTI and Brent is unsustainable for the US economy. Particularly when other commodity prices like food are increasing rather dramatically. With wages stagnant that will catch up to us sooner rather than later.

[vtsnowedin]

Pops has nailed the main part, Tanada's point also and another- Public Servants in China get paid peanuts by comparison to those in the west. We all have giant lecherous and expensive bureaucracies. The only way to get rich in China is entrepreneurism, whichever shade of gray.

You don't believe the Communist Chinese government is giant, lecherous, and expensive?

I'll bet the average Chinese "Joe rice Bowl" thinks it is.

[SeaGypsy]

1/10th the cost per unit of our lechers.

[cephalotus]

Because the US has low energy efficency and is used to waste lots of energy for little benefit.

"...Americans use more energy per capita than any other [large] country, and have nothing to show for it..."

http://www.vaclavsmil.com/uploads/smil- ... 201111.pdf

http://www.vaclavsmil.com/wp-content/up ... nology.pdf

[seenmostofit]

"...Americans use more energy per capita than any other [large] country, and have nothing to show for it..."

http://www.vaclavsmil.com/uploads/smil- ... 201111.pdf

Oh, certainly we have something to show for it. A Hummer is certainly something to show for it, and the most powerful military the world has ever seen ain't too bad either.

[vtsnowedin]

"...Americans use more energy per capita than any other [large] country, and have nothing to show for it..."

http://www.vaclavsmil.com/uploads/smil- ... 201111.pdf

Oh, certainly we have something to show for it. A Hummer is certainly something to show for it, and the most powerful military the world has ever seen ain't too bad either.

There are some egregious overstatements in that article but on balance the point is valid. In a perverse way it points to America's strong point. We can cut back by fifty percent and still be living as well as the French and Germans are today. The Europeans have much less left to cut so tightening of oil supplies and credit will hit them first and much harder then the US.