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Oil prices: the Chinese factor

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posted on Dec, 21 2014 @ 11:28 AM
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We, as consumers, have all benefitted from the low oil prices. As in any major change, even a temporary one, winners and losers are inevitable.

The obvious losers are the major oil exporters. Not only does their immediate revenue drop but, perhaps even more harmful, is projected revenues also drop. The investment/profit ratios get messed up. Proven reserves held by the Big oil companies also suffer. National currencies also take a hit, if they're propped by export revenues.

Many suggest it's deliberate and directed at Russia in concert with the U.S. and EU embargoes. Many cynics would point out that by now some international incident would normally have occurred to push the prices back up. A blow-up in the Middle-east, a fire at a major refinery.

So far, nothing....

From what I can see-and that's not much-the biggest winner has been China.

There have been reports that China is now the largest debtor nation in the world. Internal loans have been based on a 15% growth rate!

Rather than reducing their debt, China has been 'investing' in about every market place outside China that accepts their currency in payment. Oil assets all over the world, mining assets...huge and diverse.

It could also be labeled as money laundering. Bailing from their currency while they can knowing full well their currency/economy was headed to a full collapse. A collapse that would likely bring down the world's economy with it.

Enter in the drop in oil prices. China's costs to import critical oil supplies crash. The overall lower cost world-wide for consumers, thee and me- leaves more disposable income left over to purchase other items...largely manufactured in China.

This, at the least, delays any Chinese collapse if not outright saving it....and the rest of the world's economy as well.

This benefit to China has been understated, from what I can see. Is it the major reason for the continued lower prices-beyond a supply surplus- is anybody's guess. Is it deliberate or an unplanned side benefit?

Any holes in my thought process on this?




posted on Dec, 21 2014 @ 11:56 AM
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I guess there are legitimate ways of looking at it but I think the price drop in oil has more to do with Russia ,Iran.Syria and others that are moving away from the west's sphere of influence with the BRICS .Prof is in the pudding and this piece has much pudding to digest .

Welcome to the new trans-Eurasia choo-choo train. At over 13,000 kilometers, it will regularly traverse the longest freight train route in the world, 40% farther than the legendary Trans-Siberian Railway. Its cargo will cross China from East to West, then Kazakhstan, Russia, Belarus, Poland, Germany, France, and finally Spain.

You may not have the faintest idea where Yiwu is, but businessmen plying their trades across Eurasia, especially from the Arab world, are already hooked on the city “where amazing happens!” We're talking about the largest wholesale center for small-sized consumer goods -- from clothes to toys -- possibly anywhere on Earth.
www.informationclearinghouse.info... a reply to: nwtrucker



posted on Dec, 21 2014 @ 12:18 PM
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a reply to: the2ofusr1

An interesting thought in response to your post.

I can see the Middle-East nations moving away from "western influences" largely due to "Middle-East" influence over the west is at an all-time low!

With U.S. surpluses, the west is much less likely to bow to the wishes of the House of Saud etc..

Best find a new addict and repeat the cycle with China....



posted on Dec, 21 2014 @ 12:36 PM
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a reply to: nwtrucker

imo, it's a good thought process if the idea behind it is for China to cheaply buy up as much oil production as she can. The foresight here is that China's consumer goods are basically trash - from dry-wall that turns black, tainted infant formula, drones that crash, solar panels that combust, cement that self-destructs etc. If this carry-on was actually done on purpose (in order to collapse the global infrastructure) then owning the bulk of the oil could be the final blow.



posted on Dec, 21 2014 @ 12:47 PM
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a reply to: luxordelphi

Here where I see-or think I see- a flaw in your logic.

Collapse of infrastructure destroys that very value of "ownership" of oil production, or anything else, outside one's country, for that matter.

Those 'deeds', shares, etc., are now useless. No infrastructure, no means of collecting, controlling or even influencing those now useless pieces of paper that says you own.

"Possession is nine-tenths of the law" trumps all.

Come and get it......if you can.

P.S. Not to mention the fact that China would have it's own internal issues to deal with, revolt, insurrection, riots, etc.



posted on Dec, 21 2014 @ 01:00 PM
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The price drop is caused by fears of another economic crisis. That's why other markets have also become volatile.



posted on Dec, 21 2014 @ 01:10 PM
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a reply to: monkeyluv

Could you please expand on that thought. I'm having a hard time seeing how the relatively stable, if high, oil prices was causing a economic crisis.

If anything, lower prices, especially this much and this fast, is destabilizing, in and of itself.



posted on Dec, 21 2014 @ 01:10 PM
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a reply to: nwtrucker




Come and get it......if you can.



Very astute. That's always been the problem in places like, for instance, the U.S.A. An overt invasion, i.e. banners that say "We're Invading!", is not possible because we're a gun-toting, stand your ground, my home is my castle kind of culture and every backyard becomes a battle field.

When you destroy infrastructure (bridges, railways, roads, communications, logistics etc.) via deliberately sabotaged consumer goods, you foster infighting and endless investigation.

And it's like the virtuoso who has to be an absolute genius to hit the wrong note EVERY time. Just hit the right note when it comes to oil production.



posted on Dec, 21 2014 @ 05:30 PM
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Maybe increased middle eastern production, along with US production, South American production, and a lack of intention of any producer to slow down, due to a combination of wanting to continue cash flow, as well as interest in seeing what this does to a (nuisance) Russia, has resulted in oil prices dropping.

I love all the threads saying "Basic marketing logic tells us increased supply and stable demand should reduce prices, but THIS IS NOT THE CASE", however, if the demand is stable, and supply is increased (even if intentionally), why would price not go down?

Maybe it's been a good time to produce oil, and those producers have seen it as a good time to look at Russia, and her allies, and say "piss off, your economy is not as great as you thought"? I'm not saying it'll last forever or work perfectly, but, if you had a big business selling lemonade, and you had a neighbor who, apart from throwing sticks at your friends, was also selling lemonade, wouldn't you consider putting his lemonade stand out of business?

I know this is ATS and I'm an asshole for suggesting it at all, but maybe the simplest explanation might actually be real. Production has been ramped up to reduce the amount of money that the (people we're not getting along with) have to spend on messing with us.



posted on Dec, 21 2014 @ 05:41 PM
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a reply to: TheBlackTiger

Maybe it is that simple.

Maybe the Chinese side of it is just a side note. I sure don't know which, if any, trumps which...LOL



posted on Dec, 21 2014 @ 08:44 PM
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a reply to: nwtrucker



Rather than reducing their debt, China has been 'investing' in about every market place outside China that accepts their currency in payment. Oil assets all over the world, mining assets...huge and diverse.


China prepares for the Dollar collapse, hence assets are more valuable than to hold lots of Dollars.

China strengthens herself now still more in regards to The West, so pulling the plug now is not in the best interest of China yet...

Once the Petrodollar goes (and it will, and China knows it), China needs alternative alliances which will get hurt too but survive. BRICS, SCO, FTAAP, etc, are being formed as well as Russia going to test this May an independent banking system outside SWIFT.

The plug being pulled will be Russia and China going to back their currencies with Gold. That`s why you now see Germany wanting to get their Gold back, The Netherlands which shipped part of it back, Belgium, Austria, etc. asking for their Gold. China is ready for it with big Gold holdings and the other BRICS nations are now preparing with more hoarding of it.

Yet China would lose a great deal of exporting when that happens, so I don`t think they are to eager to pull the plug right now, but knows because of the imminent collapse of the Petrodollar they can survive with their massive Gold holdings and alliances with the rest of the World. But preparations are still going on by China, Russia, etc.

Russia and China their military are more being build to defend their own country when the turmoil starts.

It will be the ordinary European, Americans and the emerging markets which will have to deal with the biggest blow and the ones aligned with China and Russia who will be in the best position...

...but the new situation won`t better for China at first, so they prepare better and better now because they are still "winning" and better preparations will make the shock less for them for when it happens...but Russia and China together are able to doing it now if they want to.
edit on 21 12 2014 by BornAgainAlien because: (no reason given)



posted on Dec, 21 2014 @ 09:04 PM
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a reply to: BornAgainAlien

OK, I follow your logic.

My question is what about China's holdings of T-Bills? Supporting any change/drop of the petrodollar wipes out the value/asset of the Treasury Bonds as well.

From what I can see, China is as locked in to the Dollar as much as everyone else.

Also. I was under the impression China was using their Yuans as much as Dollars in their purchases? Is this incorrect?



posted on Dec, 21 2014 @ 09:17 PM
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a reply to: BornAgainAlien

P.S.

I don't any preparations the Russians can make regarding income-budget problems with continued low oil prices.

Right now Russia is suffering from the current prices and China is benefitting. No love lost between the two.

As far as 'defending themselves', both, and all the countries, for that matter will have far more on their hands internally to deal with that outside adventurism.



posted on Dec, 21 2014 @ 09:48 PM
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a reply to: nwtrucker

It will be write off's for them when it happens. Because of the World currency status of the Dollar China still has to have them, but they make sure it`s only part. China and Russia are holding less and less of the T-Bills already.

No one knows exactly what the Chinese are actual doing, maybe a bit of long read about China most likely having 2,500 tons of Gold and a short read about China making sure they will not be on the hook too much when it happens.

Long Read

Short Read

Russia gets 27% less revenues with 50$ oil, so they have to tighten. I have no idea about how their situation is regarding expenses budgetary wise, but part comes down to ordinary Russians paying for it now by having less money because of it. China will be better off with Russia surviving partly after the big resets so they will help Russia also somewhat out by making the massive Chinese Gold holdings available as backing to the Rouble if needed to go back to the Gold standard.
edit on 21 12 2014 by BornAgainAlien because: (no reason given)



posted on Dec, 22 2014 @ 04:54 AM
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a reply to: BornAgainAlien

Naturally far more complicated than a simple thread can cover...LOL

Still, the general point of the thread remains valid. Understating the impact of the lowered oil costs on China.

Also, I still believe that any new medium/arrangement of exchange excluding the U.S. Dollar hinges on a continued international marketplace that doesn't suffer from a collapse of any currency.

An international collapse strains the relationship between Russia and China past any reasonable breaking point. I don't see China with any 'surplus of gold" to assist Russia as it's leveraged past any recovery already-just like everyone else is- and the bottom line is China's ultimate survival is based on exports. A secure oil supply is only part of the picture.

I'd agreed both are capable of defending themselves...read that more trouble than it's worth to bother with. Yet, beyond regional defense, neither separately or together can project power sufficiently to protect trade routes...at least not yet.

Old Chinese curse...may you live in interesting times!



posted on Dec, 22 2014 @ 05:07 AM
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if the USA and its OPEC freinds can drop the price at will then they can also pump it back up at will

The price at my pump has not come down half as fast as the oil price and i bet it will be pushed back even higher when oil returns to the $100 p/p range.

We sheep always get stuffed and need to grow some teeth



posted on Dec, 22 2014 @ 05:53 AM
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a reply to: nwtrucker

I don`t think they are really looking towards it, but know it will be inevitable. If only part of the World collapses, the rest can survive, it has happened before, think about The Soviet Union or Argentina recently.

China would lose a great part of its consumers, but would have still in other parts consumers left. And later on with a new currency The West can also recover, but that can take a good amount time.

If Russia and the rest of Eurasia doens`t collapse totally, China still has countries which it can export to, only less than before, hence it is also in the interest of China not to let Russia collapse.
edit on 22 12 2014 by BornAgainAlien because: (no reason given)



posted on Dec, 22 2014 @ 06:30 AM
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originally posted by: nwtrucker
a reply to: monkeyluv

Could you please expand on that thought. I'm having a hard time seeing how the relatively stable, if high, oil prices was causing a economic crisis.

If anything, lower prices, especially this much and this fast, is destabilizing, in and of itself.





This might help:

www.zerohedge.com...

That is, a slight drop in demand may lead to a significant drop in price.

Also, one should consider volatility in other markets, especially in bonds and metals.



posted on Dec, 22 2014 @ 01:58 PM
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a reply to: monkeyluv

OK, if I have it right, a further drop in demand would, in the long run, cause a higher spike upwards than if the price stabilized around current prices. It would still go up, eventually, but not as high a bump as would be caused by reduced production by non-Opec producers.

Have I got this right?



posted on Dec, 23 2014 @ 04:08 AM
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My understanding is that deflation may be taking place. Results may include lower income, increasing difficulty in paying debts, etc. For oil, it will be difficult to deal with lower prices because marginal costs and debts are high.

Finally, three scenarios are presented here as a follow-up to that article:

euanmearns.com...




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