New column: China, Japan, the oil exporters and their trillion-dollar stashes

I think you missed an important point -- China uses US dollars to pay for its oil imports, and their willingness to pay top dollar for oil has a significant inflationary impact on the US economy.

Based on my calculations, China (net) imported (at today's prices) $31.6 billion dollars worth of crude in the first six months of 2006. (And this doesn't include the importation of refined products, of which 84 million barrels were imported during that time period.)

So spending three billion on 10% of Blackstone is chicken feed to them... which should be very scary for us.

(BTW, do you know how much refined oil products China buys from the US, if any? Could China's willingness to throw dollars at gasoline be a significant reason why gas prices are so high here?)

oh, and maybe you can do an analysis of gasoline prices... the numbers I'm looking at are WAY out of whack, suggesting that oil companies are reaping windfall profits by creating "shortages" of gasolne.

For instance, in 2004, when crude prices averaged 56.49/bbl, gasoline averaged (retail) 1.85/gallon with 20.4 cents going to marketing and distribution, 42.6 cents going to taxes, 33.3 percent going to "refining and profits", and 90.7 cents going to crude oil.

in 2005, when crude prices averaged 64.25/bbl, gasoline averaged (retail) 2.27/gallon with 22.2 cents going to marketing and distribution, 43.1 cents going to taxes, 43.1 cents percent going to "refining and profits", and $1.203 going to crude oil.

Note the 33% increase in the money going to "refining and profits" between those two years, and how both marketing/distribution and taxes remained fairly stable.

As of May 8 of this year, the average price (and current spot market price) of crude is almost exactly where it was in 2005 (64.27 average, 64.13 in the spot market today.) But somehow, gasoline prices are MUCH higher today than they were in 2005, while crude prices are about the same.

Did taxes go up that much? Are marketing/distribution costs considerably higher?Did the cost of refining increase precipitously? Because once you've ruled out those three factors, the only explanation for high gas prices today is price gouging...and considering the fact that all the company's are pricing themselves within a few pennies of each other within a geographic area, it looks like price-fixing to me.

Justin, I've always been confused by the spend versus save debate (disclosure: I am a saver by nature). What is bizarre, I think, is that while economists and economic writers such as yourself bemoan the lack of savings behavior in the US, tax policy decidedly supports spending behavior. In fact, some states go so far as to define interest on savings as "unearned income," with the implication being that since you didn't really earn it, the state is morally justified in taking more of it.

Further, it seems as though consumer spending behavior might be critical to maintaining a healthy level of economic growth in a mature economy (Japan is a good example of the inverse correlation between savings and growth, though I fully realize that correlation does not imply causation).

I can draw several possible conclusions here:

1. The economists are wrong. This one is especially attractive, because they have been crying wolf on savings since the 1980s, and no apparent harm has befallen us.

2. Economists have little or no impact on US tax policy. That certainly seems possible, even likely.

3. We are miscounting or misanalyzing the problem, and the measures and relationships are not at all what they appear to be.

4. As long as the economy maintains a healthy growth rate over time, all other problems are insignificant.

Choose any or all of the above, or add your own. Thanks.