Boycott Watch  
June 5, 2008
You Are Paying For The Beijing Olympics At The Pumps
Boycott Watch Prediction: Oil Prices Will Drop After The Beijing Olympics
    The current rise in demand for oil in China and India are driving up oil prices globally, especially in China in preparation for the Beijing Olympics. In its May 19, 2008 edition, The Wall Street Journal reported "China imported 520,000 metric tons of diesel in April, up from 30,413 metric tons a year earlier..." The question is if the Chinese demand can be sustained, or is this a blip before the Olympics?

    The fact is that China is not only hording fuel to build the Olympic venues, of which the building pace has become a torrent in the past year, but also to build a stockpile of fuel to power the diesel generators for the electricity needed at the Olympics. This is because China does not have a sufficient permanent energy infrastructure to power the Beijing or their nation in general. Meanwhile, China is stockpiling diesel fuel to make sure they won't run out, and once that hording stops after the Olympics, a glut of diesel fuel will hit the world market, thus prices will drop.

    While China is rushing to finish the construction projects on time, one must wonder if China has any projects in the works which can sustain their construction industry after the Olympics. Once the Olympics are over, the former Olympic village will be vacant virtual city, the place where the world's top athletes lived and news agencies reported from. This means an instant glut of housing, hotels, food services and office space, all in a country that may not be able to absorb those venues into their economy quickly enough to sustain the rampant economic growth leading up to the Olympics.

    Adding to this problem are the many stadiums and other sports-specific structures which will go empty, and the diesel power generators will be idled. After the Olympics in Las Angeles, the main stadium became Dodgers Stadium, thus there was a planned usage for the facility. After the Olympics in Colorado, ski resorts opened, thus also utilizing the hotels built for the Olympics and creating a tourism Mecca.

    China, on the other hand, is more interested in their "coming out party" than they are practicality or economics, as the Chinese government cares more about their image at the Olympics than anything else, even to the point of forgoing the safety of their workers and guests. (See China Olympic Venues May Be Deadly at

    While China still needs to rebuild after the recent earthquakes there, those structures are relatively small, and with the expected economic slowdown in China after the Olympics, China is likely to only rebuild damaged and destroyed structures to pre-earthquake levels. Even if China could employ all the Olympic construction crews on that endeavor, it would still be a short lived project which would eat all of China's Olympic cash flow gains.

    Still, the Olympics are likely to reignite the boycott-China calls we saw during the Olympic torch run. Those boycotts will most likely result in a 2% third-quarter drop in profits at Wal-Mart and other major importers from China, but these companies will still remain profitable because Americans still demand the low price of imports.

    It is important to note that the current high demand for oil in China and India are primarily the result of American demand for cheaper foreign goods, as the foreign economies we created are now poised to sustain steady growth on their own. These economies now inherently have an even greater internal demand for growth of their standards of living and overall economy, thus fueling an even greater demand for oil. So, when you buy that discount-priced foreign-made jacket, remember that there will be an even greater cost down the road, just as we are paying the rest of the cost of what we previously purchased from overseas in the form of higher gas prices, as evidenced by the new demand of diesel fuel in China and India. Let's face it - you have already paid for the Beijing Olympics at the gasoline pumps.

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