As US Contemplates Releasing Crude From The Strategic Reserve, China Resumes Building Emergency Inventory

Tyler Durden's picture

A tale of two civilizations, one in ascent and one in decline, can probably be best summarized by how they ration for the future in that most important of commodities - energy, in this case vis-a-vis the respective treatment of the strategic oil reserves of China and the US. Because while all the rage in D.C. political gab in recent weeks has been whether the US will allow a release of oil from the SPR, just to appease those Obama voters who actually have a job and have to take a car to get to it, things over at America's nemesis in civilizational conflict are diametrically opposite. As Bloomberg reports, China has "started filling its emergency petroleum reserve at Lanzhou in the nation’s northwest, according to an official at the nation’s largest crude producer." Unlike the US, where everything is now a function of market liquidity, evil speculators, and political ambitions (rest in peace supply and demand), China is completely ignoring all the day to day mundane drivel, and is doing what is right - which is to make sure it is prepared for an "eventuality" in the crude supply. Said eventuality is 100% guaranteed to happen if the Panetta-McCain is given a green light to allow the liberation of Iranian crude to finally proceed following years of foreplay.

From Bloomberg:

China, the world’s second-largest crude consumer, finished filling the first phase of its emergency stockpile with 103.2 million barrels of oil in 2009. The second phase, comprising eight locations with a storage capacity of 168.6 million barrels, is scheduled to be completed by early 2013. The Lanzhou depot has a capacity of 18.9 million barrels.


The nation imports 10 million metric tons of crude a year, or 200,000 barrels a day, from Central Asia via a pipeline from Kazakhstan that started in 2006. The annual capacity of the cross-border oil line, China’s first, will rise to 20 million tons by 2013, according to CNPC.

As a reminder, here is how Chinese crude imports stood most recently as of January:

Yes. A record.

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VulpisVulpis's picture

All your crude are belong to us.

AN0NYM0US's picture

Obama Strategic Election Reserve

Fukushima Sam's picture

Who needs an SPR when you can just go take it from Iran?

SheepDog-One's picture

Yes who needs reality, when we can just take over the entire world! Pretty much baked in they just have to pull it all off. Personally I think it all goes wrong. 

Augustus's picture

Why take from Iran when it can be taken from Iraq or Afghanistan?

Oh, Wait.  That nonsense did not happen either.

FukiSam had too many chili beans and the brain fart exploded.

Arthor Bearing's picture

It will probably take 100 barrels of oil powering our war machines to capture each barrel of oil in Iran

falun bong's picture

yep a nice circle jerk, the US Military uses something like 20% of America's crude...while they are getting America's crude

Sudden Debt's picture






How long till' the Chinese liberate Americans from themselves?

espirit's picture

I understand Walmart is also building emergency reserves of cheap Chinese iThings.

Laughing all the way to the bank, but it isn't me.

Tompooz's picture

   "How long till' the Chinese liberate Americans from themselves?"


That's a 50-year project.

SelfGov's picture

If that graph indicates anything it is that the US won't have the cheap oil resources necessary to build this fleet of electric cars that is supposed to "save" us.


Plant a garden.

Arthor Bearing's picture

People talk about the energy problem like it's a problem of production.

It's a problem of consumption. That's where we can make major breakthroughs, with existing technology. Plant a garden. Ride a bike. Turn off the air conditioner and sweat a little you fucking idiots.

Death and Gravity's picture

Observe an entire country hooked on a drug.

And it ain't heroin.

SheepDog-One's picture

I dont care about oil myself, I dont need it.

This will all really suck bad for the avg consumer-merican soon though.

Silver Dreamer's picture

I like oil but abhor the idea of murdering people to maintain an easy supply and low price of it.

Arthor Bearing's picture

It will not be an easy supply by any means. Any oil fields and pipelines not sabotaged by guerillas will come at a steep price of not just blood and money, but OIL used to power our war machines. It's a dead end attempt at a solution, but it makes rich and powerful people more rich and powerful so we all have to go along with it. Remember they hate us for our freedoms.

CrashisOptimistic's picture

So you're saying you are typing on a keyboard made of wood?

Augustus's picture

The only real oil of value is Gash Oil.

fightthepower's picture

Bullshit, even if you don't drive, you buy things that are transported using oil, oil is used for all farming.  You eat don't you?

redpill's picture

The SPR is a political tool, not an economic one.


uno's picture

they probably are trying to talk down the price, when Israel strikes Iran that is when they will have to release it, of course coordinated with Election

Zero Govt's picture

"..China Resumes Building Emergency Inventory"

Gotta get rid of those Dollars somehow so may as well swap the Fed toilet paper for something worthwhile

r00t61's picture

While I agree with that sentiment in theory, in practice, China needs to hold vast amounts of US dollars in order to maintain their currency peg.

But I suppose that doesn't preclude them from using some excess FRNs to get their hands on the black gold.

Dr. Engali's picture

China is preparing to cut that peg. When that happens shit will hit the fan.

JeffB's picture

"China is preparing to cut that peg. When that happens shit will hit the fan."


Not sure if that is their intent, but it would sure be an effective way to wage an economic war against us. It would cost them as well, of course, but what war doesn't?


Flakmeister's picture

Why would they cut the peg?

They would be shooting themselves in the foot, unless you are arguing that they want to devalue, are you implying that?

JeffB's picture

The peg is how they devalue their currency, in effect cutting the wages of their workers among other things.

That of course helps their exports, but eventually they're going to need to get away from building stuff for us for slave wages. Once they get their infrastructure in place, and have the know how, and the trained workforce, they can stop taking our ever devaluing pieces of paper and make stuff for themselves, or for countries and people who can give them more value for it.


WestVillageIdiot's picture

Price inflation is much worse when you have 1.2 billion mouths to feed.  China should know that they helped build this monstrous system and are now just as beholden to it, if not more, than any other participant. 

In the 1980s everything we bought had a "Made in Japan" label.

In the 2000s everything we bought had a "Made in China" label.

What happens to China if another name appears on all those labels?  Are they ready for that?

spartan117's picture

ZH had an article on that.  China is buying factories in eastern Europe to hedged against that happening.

WestVillageIdiot's picture

Is Bulgaria really the answer?  I'm being serious.  Of all the countries I would be looking at to invest in that might be pretty low.  I never hear a good story about Bulgaria, of all the former Eastern bloc countries. 

Ace Ventura's picture

Thought that was the Romanians? Actually all those former Soviet colonies probably make decent variants.

Silver Dreamer's picture

I have a Bulgarian base rebuild from Lancaster Arms and love it.

falun bong's picture

Bulgaria is a proper thug-ocracy, run by former weightlifters from their Olympic team. Yah those same guys you see on YouTube blowing enormous farts as they clean and jerk 700 pounds

Tompooz's picture

Bulgaria runs a balanced budget and is ready to join the Euro zone. Bulgaria is actually a shining example to its neighbour, Greece.

GeneMarchbanks's picture

One is looking long term, the other living day to day...

aerojet's picture

I find it hard to believe that China is somehow the ant in this story.  If anything, it's the Chinese who are living paycheck to paycheck and kiting checks.

GeneMarchbanks's picture

That is asinine. The Orwellian terminology has you terribly disillusioned.

matrix2012's picture

Right! The printers belong to DC thus it must be better off! 

uno's picture

"the other living day to day'

more like looting like there is no tomorrow (which there probably isn't)

Silver Dreamer's picture

The chess pieces continue to be moved in preparation for peak war.

SheepDog-One's picture

'Check....checkmate....check....checkmate' for 3 years now.

Incubus's picture

Can't wait for the draft.  I'd seriously go to war if some pig politicians got out of DC and went on the battlefield.  But they won't, so fuck em.  I'm not gonna fight someone else's war. My "war" is a socioeconomic one.  My "war" isn't a physical one where pigs sit around in their suits and find boogeymen to throw "excess" human "labor" at.





SheepDog-One's picture

LOL whats wrong....$106 oil putting a bit of a bind in the Maniacal Monetizers panties?

Moneyswirth's picture

Is it possible that China's is a more capitalistic, more market-oriented economy than of the United States? 

Moneyswirth's picture

"than of the United States" = "than that of the United States"