The Price of Gas in China

[WhiskeyGirl]

The Price of Gas in China

The cult of the car is growing in China, along with its attendant environmental woes
By David Biello

Aggressiveness among the Volkswagen Santanas that make up the majority of the taxi fleet here is rewarded and the air is filled with the fumes from thousands of cars. Even though China only has 24 cars for every thousand Chinese (compared to 800 cars for every thousand Americans) the country is on pace to become the world's largest purchaser of automobiles by 2020—and this growing love affair between the Chinese and driving is a risk for the entire planet.

Year after year the Chinese buy more cars; sales grow by about 20 percent per year, up to 8.8 million vehicles in 2007. Although Chinese law mandates that cars get at least 35 miles per gallon fuel efficiency, a level the U.S. fleet won't reach until 2020, a large enough fleet of Chinese cars would forestall efforts to combat climate change or eliminate the other environmental challenges posed by paved roads, suburbanization and all that traffic.

The U.S. may enjoy the world's most extensive highway system at present, but the Chinese are rapidly catching up—from a few paved highways in the 1980s to 2.2 million miles (3.6 million kilometers) of paved roads in 2007. China National Highways and Expressways connect major and minor cities, like the Yu-Li Expressway that connects Chongqing and Wanzhou—and, when completed, beyond to Chengdu in the west and Shanghai in the east. The Chinese will spend $9.3 trillion in the next decade according to investment bank Morgan Stanley, building out its roads and other infrastructure. Gangs of chain-smoking men in safety vests armed with earthmovers and mechanized shovels eat into the hillsides and plains to build yet more roads.

Let's not forget to mention weaning the world off oil, but that is just as much a necessity for China, whose national oil fields are declining, as those of any country. "With regard to petroleum, the world total is limited and the price is very high," says Lai Hun Suen, a professor of sustainable development at Chongqing University and a municipal government official. "We cannot rely on oil."

Gasoline cost between 4.97 and 5.56 yuan per liter (around $2.77 to $3.09 per gallon), depending on the grade, in May, thanks to government subsidies. This artificially low price has cost the largest oil refinery company in the country—and third largest in the world—Sinopec more than 20 billion yuan this year. So the Chinese government raised fuel prices on June 19 by nearly 20 percent.

A long-term Chinese love affair with cars—reminiscent of the U.S. in the 1940s and 1950s—is blossoming. And there seems to be a growing predilection for gas-guzzling sport-utility vehicles, whose sales climbed to 370,000 last year, according to the China Association of Automobile Manufacturers. "I am quite ashamed because my family has two SUVs," admits one Beijing resident who wouldn't give her name. "My sister bought [one because it is] a sturdy car for her baby and my brother bought [one] to be cool."

At least one car graces every driveway and dealerships line the arterial road just like in the U.S.: Honda, Hyundai, Kia, Lexus, Suzuki, Volkswagen. The cars are varied—"buy domestic" does not seem to be a part of Chinese politics to judge by the vehicles preferred by officials—Audi A6s; Buick Excelles and Regals; Chevrolet Epicas; Citroën 88s; Ford Focuses; Honda Accords; Hyundai Elantras; Toyota Prados and Reizs; Volkswagen Jettas, Passats and Santanas; along with a smattering of Great Walls, Geerys and Chang'ans from domestic manufacturers.

The Chinese government hopes to avoid an auto-driven environmental apocalypse both by mandating increasing fuel efficiency but also by pushing these domestic vehicle manufacturers for homegrown hybrid, electric and fuel-cell vehicles under its "863" program—deriving its name from its launch back in March 1986. At least 20 prototype hydrogen cars from Shanghai Volkswagen will be at the Olympics. "That's one of the strategies: electric cars, more railways, more subways to replace oil-driven transportation," says CREIA's Li Junfeng. "In no more than five years, China will be the biggest market [for hybrids]."

And foreign manufacturers are using China as a test bed for such advanced technologies. For example, General Motors has opened an automotive energy research center at Tsinghua University in Beijing and introduced its E-Flex concept cars—the Chevrolet Volt, Cadillac Provoq and Opel Flextreme—at the Beijing Auto Show in April. Ultimately, however, these cars will still rely on gasoline and/or electricity—and that electricity in China predominantly comes from polluting coal.

But even if the Chinese foreswear the car, an impossible prospect, that will still leave the 10 million trucks—and growing—the country needs to move goods from place to place. Such trucks are the primary traffic on most Chinese highways, trundling past signs that read in both Chinese and English "Don't driving when tired" or "Overspeeding prohibition" and groaning under heavy loads precariously held in place with netting and tarps.

"The driver needs more profits," explains environmental official Fan Changwei, of one such overburdened truck that looks like it might tip at any moment. "It's not easy because the price of oil is getting higher and higher." Both economically and environmentally.

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When I read stuff like this, I feel like I am living in "Mayberry RFD".  A nice place to visit, but not the real world.

Wow...I'd like to see an acknowledgement in the U.S. that the oil well isn't going to flow forever.

jmho