The Chinese have apparently had capped electricity prices for some time. Well, when the cost of coal went up, the generators started losing money and some of the generators shut down, leading to some electricity shortages. So the Chinese gov’t imposed price controls at the mines. So the price of coal arriving at the ports went up. And now the Chinese gov’t is imposing price caps at the ports. Talk about chasing your tail!
The world’s fastest-expanding major economy faces such acute power shortages that electricity-sapping industries including aluminum smelters have had to halt production.
Energy supply shortages have become a “key factor” in holding back the nation’s economic and social development, the Chinese government said in a statement yesterday.
To conserve energy and cut the nation’s demand for oil, Premier Wen Jiabao ordered the nation to cut back on summer air conditioning and drive less, according to yesterday’s statement. The nation will also shut more oil-fired power generators, it said.
Of course, more price controls will invariably lead to greater shortages. I really don’t see the benefit of low prices if there is nothing there to be bought.
It’s worth pointing out that the Chinese are facing actual shortages, whereas we are having to cope with ample supply @ higher prices. We tried the price control and shortages thing a few decades ago. Fortunately we still seem to have enough sense to try to avoid repeating that. Anyway, let’s welcome the Chinese to the 1970s. I hope they like disco.
