When you are investing your money for the long term, ideally, you are looking for companies that can weather whatever economic cycle we happen to be in. The company will not only make money, but when the turn comes, it will do even better than before. These are rare companies. it is a rare if we change company to countries.

In an article written by Rebecca F. Elliot and Keith Bradsher of the New York Times News Service, China is becoming on of those rare countries. For decades, analysts could easily say problem with Middle East oil, problem with Chinese economy as China is dependent on Midde Eastern oil. The war between the US and Iran has changed perspectives.

China has spent money stockpiling huge amounts of oil, built extra refining capacity and invested in coal and other alternatives, so it has the ability to ride out the effects of Middle East oil supply changes.

China is dominant in making and implementing solar panels, batteries and electric vehicles (EVs). This means that a threat to cut off supply of Middle Eastern oil is less of a concern in Beijing.

China’s massive oil reserves and refinery capacity, paired with its ability to run its economy on a variety of energy sources allowed the country to slash the purchase of imports by 23% in the first 6 months compared to a year ago.

This reduction in demand has both caught many analysts by surprise and it means energy prices have not gone even higher in price. Under the normal conditions, Daan Truyven, who heads oil research for Goldman Sachs, predicted oil prices would have been $10 higher.

China is one of the biggest importers of oil, but they are also one of the biggest refiners of oil. Early in the war against Iran, China ordered severe restrictions on exports of refined fuels like gasoline and diesel, both to conserve domestic supplies and to punish countries at odds with China’s foreign policies.

EVs now make up 14% of the passenger cars on the road in China. This translates into using 1.5 million barrels of oil less than it used to. According to the International Energy Agency it shaved off 1% of global oil demand.

Linking to dividend paying stocks, companies seek out alternatives to spend less money on a regular basis in case a shock to the system might affect them. Companies are more energy efficient which means they use less energy, if the price goes down a huge savings, if the price of energy goes up, the costs are bearable. That is a good thing for the company and when you find a company doing such things, you can put it on your radar to buy at good valuations. The reason being all things being equal the company will do better than most and that is good for you.

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