"Jan, my desk trades in global equities," stated a short blond woman in a garnet-colored blouse. "Can you tell me which countries are most vulnerable to the reduced Saudi oil exports?"
"Sandra, I can only tell you where the Saudi oil exports are currently going. The U.S., as you know, has been a prime customer of Saudi oil since the 1930s. Washington has long pursued a goal of reducing our reliance on Middle East crude, but Saudi oil still accounts for nearly fifteen percent of our total imported oil."
"How about the European Union?"
"Western Europe obtains most of their oil from the North Sea, but Saudi imports do play a factor. Their proximity to other suppliers should mitigate severe shortages, I believe. No, the hardest-hit countries will be in Asia."
Clayton drained the last of her coffee while she pulled up a file on her computer. She curiously noted that the occupants of the entire room remained seated and listening to her every word.
"Japan will feel a major jolt," she said, scanning the report. "The Japanese import one hundred percent of their oil requirements and were already stung by the recent earthquake in Siberia that took out a section of the Taishet-Nakhodka pipeline. Though not widely publicized, that accident had already pushed the price of oil up three to four dollars a barrel," she noted. "I can tell you that Japan imports twenty-two percent of its oil from Saudi Arabia, so they will feel a significant contraction. However, a temporary boost in Russian oil exports could take away something of the strain once the Siberian pipeline is repaired."
"And China?" an anonymous voice asked. "What about that fire near Shanghai?"
Scanning down the page, Clayton furrowed her brow.
"The Chinese will be facing a similar shock. Nearly twenty percent of China's oil imports come from Saudi Arabia," she said, "all of which arrives by tanker ship. I haven't assessed the impact of the fire at the Ningpo oil terminal, but I can only speculate that combined with the Ras Tanura disaster, the Chinese will be facing a major hurdle in the near term."
"Are alternative sources available to the Chinese?" a voice in the back asked.
"Not readily. Russia would be the obvious source, but they are more inclined to sell their oil to the West and Japan. Kazakhstan might provide some relief, but their pipeline to China is already at capacity. I think there could be a dramatic impact to the Chinese economy, which is already suffering a shortage of energy resources." Clayton made a mental note to review the Chinese situation in more depth when she returned to her office.
"You mentioned domestic fuel shortages earlier," a pasty-faced man in a purple tie asked. "How severe will that be?"
"I would expect only temporary shortages in limited areas, assuming no other market impacts. Again, the main problem we are facing is fear. Fear of another supply disruption, either real or imagined, is the real culprit that could drive us to a complete meltdown."
The meeting wound down as the crowd of financiers glumly scurried back to their gray work cubicles. Clayton gathered her laptop and headed for the door as a figure drew up alongside her. Turning her head, she gazed with apprehension at the slovenly figure of Eli, a doughnut crumb on his tie.
"Great meeting, Jan." Eli grinned. "Can I buy you a cup of coffee?"
Gritting her teeth, all she could do was smile and nod.
-13-
IT WAS A STIFLING day in Beijing. A suffocating conflux of heat, smog, and humidity doused the congested city in a thick soup of misery. Tempers flared on the streets as cars and bicycles jostled for position in the jammed boulevards. Mothers grabbed their children and flocked to the city's numerous lakes in an attempt to seek a reprieve from the heat. Teenage street vendors hawking chilled Coca-Colas made stellar profits quenching the thirst of sweaty tourists and businessmen. The temperature was little cooler in the large meeting room of the Chinese Communist Party headquarters, situated in a secure compound just west of Beijing's historic Forbidden City. Buried in the basement of an ancient edifice inaptly named the Palace Steeped in Compassion, the windowless conference room was an odd conglomeration of fine carpets and antique tapestries mixed with cheap 1960s office furniture. A half dozen humorless men, comprising the elite Standing Committee of the Political Bureau, the most influential body in China's government, sat at a scarred round table with the general secretary and president of China, Qian Fei.
The stuffy room felt much hotter to the minister of commerce, a balding man with beady eyes named Shinzhe, who stood before the party chiefs with a young female assistant at his side.
"Shinzhe, the State just approved the five-year plan for economic progress last November," President Fei lectured in a belittling tone. "You mean to tell me that a few 'accidents' have rendered our national objectives unfeasible?"
Shinzhe cleared his throat while wiping a damp palm on his pant leg.
"Mr. General Secretary, politburo members," he replied, nodding to the other assembled bureaucrats. "The energy needs of China have changed tremendously in the last few years. Our rapid and dynamic economic growth has driven a high thirst for energy resources. Just a few short years ago, our country was a net exporter of crude oil. Today, more than half of our consumption is supplied by crude oil imports. It is a regrettable fact due to the size of our economy. Whether we like it or not, we are captive to the economic and political forces surrounding the foreign petroleum market, just as the Americans have been for the last four decades."
"Yes, we are well aware of our growing energy appetite," stated Fei. The recently elected party head was a youthful fifty-year-old who catered to the traditionalists in the bureaucratic system with equal parts charm and wile. He had a reputation for being hot-tempered, Shinzhe knew, but respected the truth.
"How severe is the shock?" another party member asked.
"It is like having two of our limbs cut off. The earthquake in Saudi Arabia will drastically restrict their ability to ship us oil for months to come, though we can develop alternate suppliers over time. The fire at Ningbo Harbor is perhaps more damaging. Nearly a third of our imported oil flows through the port facility there. The infrastructure necessary to receive oil imports by ship is not something that can be quickly replaced. I am afraid to report that we are facing immediate and drastic shortages that cannot be easily remedied."
"I have been told the damage repairs may take as long as a year before the current level of imports can be restored," a white-haired politburo member said.
"I cannot dispute the estimate," Shinzhe said, bowing his head.
Overhead, the room's fluorescent lights suddenly flashed off, while the noisy and mostly ineffective air-conditioning system fell silent. A stillness settled over the darkened room before the lights flickered back on and the cooling system slowly clanged back to life. Along with it came the temper of the president.
"These blackouts must stop!" he cursed. "Half of Shanghai was without power for five days. Our factories are operating limited hours to conserve electricity, while the workers have no power to cook their dinner at night. And now you tell us that we will be short of fuel oil from abroad and our five-year plan is rubbish? I demand to know what is being done to solve these problems," he hissed.
Shinzhe visibly shrunk before the tirade. Glancing around the table, he saw that none of the other committee members were brave enough to reply, so he took a deep breath and began speaking in a quiet tone.