International Energy Newsletter: When Europe and the United States are caught in debt crisis, QE3 is in the spotlight. One important news is: In the coming period, oil prices may decline, and its impact will be huge.
The developing countries represented by China are rapidly industrializing by integrating into the global production chain. In terms of numbers, they are the largest industrialization wave in human history. This puts near-permanent demand on oil. As demand for oil in Europe, Japan, and the United States declined year-on-year, Chinese oil demand soared again and again, just as China’s demand for other commodities. From this perspective, it seems that oil prices will only rise.
However, two reasons make us afraid to be so optimistic.
First, China's high-speed heavy industrialization is highly dependent on the extraordinary growth of exports and the upgrading of related industries. The decisive factor is the digestion of China's surplus production capacity by the demand bubble of developed economies. With the debt accumulation of western countries unsupported and the gradual deleveraging and rebalancing process, the growth rate of Chinese exports is doomed to decline. In this environment, the process of heavy industrialization in China will also slow down, and demand for oil may start to slow down.
Second, the persistence of high oil prices also exerted tremendous pressure on the efficiency of oil use. Contrast with developed countries, China and other countries are catching up with the efficiency of oil use. In this way, the demand for oil may be reduced year by year with the same GDP growth rate.
It is difficult for QE3, which has attracted much attention, to influence the general trend of oil prices. Quantitative easing policies can only have an indirect impact on oil prices if they can affect the real economy. QE2 is not worth mentioning in this respect. Even if QE3 is launched, its impact on the real economy is unlikely to be as expected, and oil prices will continue its internal trend.
Our analysis once pointed out in May of this year that oil prices may have been built, and further analysis found that the future of oil prices is even worse than the most pessimistic forecast. Detailed quantitative analysis pointed out that the factors that affect oil prices are the largest, including the decline of the PPI index, the recession of the US and European economies, the deceleration of the Chinese economy, and the reduction of the return rate of the capital market. In the current economic environment, pressure will continue to be exerted on oil prices; especially During 2012, the price of oil may bottom out at $40 or nearby areas.
For China, the benefits of lower prices for oil and other commodities outweigh the disadvantages. If we can take the opportunity to promote the pricing mechanism of domestic petroleum products and promote the marketization process, it may be a solid foundation for the long-term stable growth of the Chinese economy. However, if you allow high-energy consumption and high-pollution production to expand your chances, it will not be good for the national welfare. In addition, all related industries and companies should also pay attention to the various types of business and investment risks that may be caused by falling oil prices.
The developing countries represented by China are rapidly industrializing by integrating into the global production chain. In terms of numbers, they are the largest industrialization wave in human history. This puts near-permanent demand on oil. As demand for oil in Europe, Japan, and the United States declined year-on-year, Chinese oil demand soared again and again, just as China’s demand for other commodities. From this perspective, it seems that oil prices will only rise.
However, two reasons make us afraid to be so optimistic.
First, China's high-speed heavy industrialization is highly dependent on the extraordinary growth of exports and the upgrading of related industries. The decisive factor is the digestion of China's surplus production capacity by the demand bubble of developed economies. With the debt accumulation of western countries unsupported and the gradual deleveraging and rebalancing process, the growth rate of Chinese exports is doomed to decline. In this environment, the process of heavy industrialization in China will also slow down, and demand for oil may start to slow down.
Second, the persistence of high oil prices also exerted tremendous pressure on the efficiency of oil use. Contrast with developed countries, China and other countries are catching up with the efficiency of oil use. In this way, the demand for oil may be reduced year by year with the same GDP growth rate.
It is difficult for QE3, which has attracted much attention, to influence the general trend of oil prices. Quantitative easing policies can only have an indirect impact on oil prices if they can affect the real economy. QE2 is not worth mentioning in this respect. Even if QE3 is launched, its impact on the real economy is unlikely to be as expected, and oil prices will continue its internal trend.
Our analysis once pointed out in May of this year that oil prices may have been built, and further analysis found that the future of oil prices is even worse than the most pessimistic forecast. Detailed quantitative analysis pointed out that the factors that affect oil prices are the largest, including the decline of the PPI index, the recession of the US and European economies, the deceleration of the Chinese economy, and the reduction of the return rate of the capital market. In the current economic environment, pressure will continue to be exerted on oil prices; especially During 2012, the price of oil may bottom out at $40 or nearby areas.
For China, the benefits of lower prices for oil and other commodities outweigh the disadvantages. If we can take the opportunity to promote the pricing mechanism of domestic petroleum products and promote the marketization process, it may be a solid foundation for the long-term stable growth of the Chinese economy. However, if you allow high-energy consumption and high-pollution production to expand your chances, it will not be good for the national welfare. In addition, all related industries and companies should also pay attention to the various types of business and investment risks that may be caused by falling oil prices.
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