Dividends and Natural gas shortages hit China as temperatures plunge

During the months of January and February, there are reasons why people in the northern half of the US go to the southern half of the US, and many of the reasons have to do with weather. It typically gets cold in the northern half and people desire to escape the cold for a little while. If you do not leave, heating bills rise as well as the need for heavy jackets, hats and gloves. If you go outside, you can be prepared, but if you stay indoors, you expect to be reasonably warm.

In an article by Keith Bradsher of the New York Times News Service, the northern part of China is facing cold temperatures without the heat of the natural gas. The reason is complex but there is no shortage of natural gas in China.

China had a very tight shutdown COVID policy and to do that cities and towns used resources for mass testing. The testing cost money which means many towns and cities budgets are not enough to pay employees, let alone to maintain adequate supplies of gas for homes.

When gas prices were low, the national government helped to ensure there was a lid on heating bills. In the winter, gas prices have gone up as demand as increased and municipal and provincial governments have cut subsidies for natural gas. As a result, gas is effectively rationed, people have enough to cook but not enough to heat the home.

Another issue is with pricing regulations – Chinese regulations strictly limit what municipal and township gas distributors can charge households but are allowed to pass on higher prices to industrial and commercial users. This effectively means homes are cut back and greater gas goes to industrial and commercial users who can pay more.

Linking to dividend paying stocks, all systems have a flaw or can have a flaw if circumstances change and who is to blame and who fixes the flaw is the solution, At the individual level, remarkably few people want to take the blame, or the problem becomes complex which results in nobody is to blame. Sometimes regulations drive actions, it is important for companies to work with the government to have the best outcomes no matter the outcomes.

There are more questions than answers, till the next time – to raising questions.


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