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China's currency reserves can only buy 10 years of Chinese oil imports if China does not try to use them to buy large amounts of oil ... if it were to do so, the value of the US dollar would crash, and with it would go the crude-oil purchasing power of its foreign exchange reserves.

Now here's an interesting question. Suppose China wants to continue increasing their energy use at a few percent per year, using its currency reserves if necessary. How fast and how high and in how much time would the price of oil go, and who else would be deprived of that oil given that global supply has peakedis in an undulating plateau?

What data do I need for that? Total energy use (or domestic production) as well as imports, but how about the demand elasticity of the oil price?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Wed May 28th, 2008 at 02:27:32 AM EST
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