For Chinese, the Reality of Higher Gas Prices
GANSU — Returning the fueling nozzle to the pump, Zhang Li jumped into the driver’s seat of his gas-guzzling Land Rover. “Such a long line,” said the 45-year-old tour guide, shaking his head. “What’s the world coming to? My stocks are worth air, and now I have to wait an hour for overpriced gas, too.”
By JIMMY WANG
Published: June 21, 2008
—The New York Times
If you didn’t read this article over the weekend, you really should. Go straight to The New York Times’ web site and read it from start to finish.
“I invested 80 percent of my savings,” said Wang Li, a 30-year-old manager in Shanghai. “And I’ve lost over half my money now. I’m angry — the government’s measures to keep the stock market above 3,000 have failed.”
Seems it’s not just the United States that’s been cultivating a society of entitlement with an unsustainably horrific energy policy:
As a matter of policy, the Chinese government sets gasoline and diesel prices well below international market prices in order to encourage economic growth. In 2007, China’s subsidy of gasoline alone was $22 billion, close to 1 percent of its gross national product.
Somehow, of course, all this will be deemed bullish, although it may not come in time for a few of the local investors:
“When the market took a dive earlier this year, I was really depressed for a while,” he said. “I didn’t go to work several days; I just drank. Now I’m anxious everyday; I watch the stocks and I can’t sleep. I’m just simmering inside with anger. Who knows? One day I might just explode.”
Keith Bradsher contributed reporting from Hong Kong. Lucy Liang contributed research from Beijing.
The stocks are worth air, and the investors are ready to explode. Good thing everybody over here plowed into emerging economies last year.
Jeff Matthews
I Am Not Making This Up
© 2008 NotMakingThisUp, LLC
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3 replies on “Stocks Worth Air, Drivers Ready to Explode”
I hate to sound crass, but okay, I will anyway:
Someone should keep track of this guy… When he finally throws in the towel and sells whatever he’s got left, it’ll be time to get long over there again.
Didn’t Buffett sell his PetroChina stock? If I remember correctly, he made some money on the trade but (with perfect hindsight) one wonders how the possibility of the following occurring escaped him.
“But controls have also squeezed Sinopec and PetroChina, China’s top oil refiner and producer, respectively. They still had to pay near-record oil prices on world markets even if they were not allowed to charge market prices to consumers. The companies lost money on every gallon of gas they sold in China.”
Buffett sold the PetroChina stock lasat year for $4 billion. Cost him $488 million to build the position in 2002 and 2003.
And you are right that in hindsight the potential for destructive Chinese policies to hurt PetroChina seems obvious.
But at the time Buffett bought the stock, he clearly felt those risks were already discounted in the shares.
JM