China: Beware the petrodragon's roar

"The decision last week by the Organization of Petroleum Exporting Countries (OPEC) to raise oil output by 2.5 million barrels per day  was largely aimed at countering market fears of an impending oil shock. With crude-oil prices hovering in the high-US$30 price range, way above OPEC's alleged benchmark $22-$28 price range, everybody from the Thai government to the airline industry has been muttering about the negative impact of high oil prices on economic performance. . . .
Chinese demand so far has been dizzying. When OPEC met earlier in the year it had no intention of raising output, but its hand was in effect forced on the back of Chinese demand, which accounts for nearly half of this year's surge in demand, and US concerns over rising gasoline prices. Energy demand in the Pearl River Delta and Shanghai region is so strong that power is already being rationed, and many factories have taken to installing generators to hedge against blackouts. This in turn has resulted in shortages of diesel as companies stockpile supplies for the peak energy-consumption period this summer. Various oil companies are falling over themselves to supply the hydrocarbon frenzy in the world's second-largest oil importer. The current situation of high prices and strong demand has been further aggravated by China's low inventories and the pegging of its currency to a weak US dollar."