When you are investing you are projecting what will happen in the future and often it is based on what has happened in the past. If a company is well run in the past, there are few reasons not to expect the companies to be run in the future, thus it should have similar results. The issue is what changes the projections?

If you think about China, it is the world’s second largest economy and the center of global manufacturing. That means it will consume a great deal of energy. If you add that China is the leading customer of Russia and Iran, that adds perspective into what is happening in the Middle East.

In an article by Chen Aizhu, Sam Li, and Lewis Jackson of Reuters, China the world’s largest importer of oil needs less oil than previously thought.

Gasoline sales at Sinopec, which runs China’s biggest network of petrol stations and is the world’s largest refiner, dropped 8% on a yearly basis in April, diesel fell 6%.

Fuel use in China had been dropping in recent years owning to slowing economic growth and the rise of electric cars and trucks, but the recent declines has caught industry players by surprise.

Goldman Sachs estimates the drop in gasoline and related products by 20% in April.

Alternatives such as rail travel grew by 10% according to the Ministry of Transport data.

The China Charging Alliance grew 69% from a year earlier as the Chinese EV fleet became larger.

About half of China’s crude oil consumption is refined into gasoline or diesel.

May imports slumped 29% to their lowest level in 8 years to 7.8 million barrels a day, after a 20% fall in April. The last time China had a dropped in fuel was during the pandemic, but that was an imposed shutdown by the government or lack of mobility for the population.

Sinopec expects national demand for gasoline, diesel and jet fuel to fall 10% in the 2nd and 3rd quarter.

The Chinese transport ministry said 1/4 of all vehicles on the highways over the May Day holiday were electrics or hybrids, 1/3 more than the previous year.

Linking to dividend paying stocks, we all make expectations about the future and most of them rely on some assumptions from the past. In the US, the Trump administration encourages gasoline powdered vehicles, in China the government encourages EV. Both populations are mobile, but one is more connected to the world price of oil. Is that good? will something change in the future? If it was to change, which companies would have the advantage?

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