("only" 7%, 2006, for ordinary motorists is scary when you consider in Beijing alone 1000 new cars are sold... a day)

Farmers, who are a major user of diesel, say they're struggling to buy fuel for their trucks, tractors and harvesting equipment. Some complain that the government's price control amounts to a subsidy for the rich who can afford to buy a car. Why not subsidize farmers directly, they wonder.

"We want to hoard some diesel too if possible," said Wang, who grows wheat, soybeans, corn and sweet potatoes. "But in order to do that, you have to have some connections. And we don't."

Keep in mind folks, in a World of Shortages we are in competition with emerging powers that be for resources. You can see now just a small sample of potential suffering - that great sucking sound Ross Perot talked about is US dollars flooding into coffers in the Middle East and China. And that money is being used against us in this competition. This is what a massive debtor nation faces, in much larger magnitude in the decades to come. This episode is just a preview of things to come - a world of both heightened inter country and intra country (rich v poor) social strife is sure to be the ultimate path. An interesting opinion piece to finish off this entry.

• Can China afford its own oil subsidies at a time when it is spending billions on post-earthquake reconstruction?
• The short answer is yes, because China is blessed with both large trade account and fiscal surpluses. (The U.S. has neither of course) The reconstruction cost is projected to amount to about 1 percent of China's gross domestic product, while the fuel subsidies account for another 1 percent, JP Morgan estimates.
• Remember that China had a fiscal surplus of 0.7 percent of GDP last year, or $174 billion. So even if spending on post-earthquake rebuilding and fuel subsidies were to cause a 1 percent fiscal deficit, that would still be very manageable. (this is why I openly wonder if they will even bother to cut subsidies at all - they don't have to in a fiscal sense)
• But here's a more important question: Why should China keep domestic fuel prices at about half of the global average?
• What's more, a worsening fiscal situation might put downward pressure on the yuan. Fuel subsidies have exaggerated inflation in the developed world, while understating inflation in the developing world. China's inflation could well hit 15 percent if Beijing were to free up caps on energy prices.
• "If China is not able to take away the subsidy and cut down its demand, it will have huge implications for the world," said Shikha Jha, a senior economist at Asian Development Bank.
• While the West is critical of China's energy policy, there is little outcry for change within the country, except for complaints from two loss-making refineries.
• "The people need to wonder, who pays for the subsidies?" said Louis Vincent Gave, chief executive of research and asset management firm GaveKal. "Most Asian countries are printing money to pay for them." (goodie, more inflation as more paper currency chases fixed amounts of hard goods)
• Morgan Stanley expects some emerging market currencies to face downward pressure, probably for the first time in a decade, as those countries unwind their fuel subsidies and domestic inflation shoots up.
• "Giving out subsidies is an easy and popular thing to do," said Bill Belchere, an economist with Macquarie Securities. "But getting rid of it is like hell."

Interesting times indeed.