From the BBC:

China has raised fuel prices by almost 10% in an effort to ease the country's worsening supply crisis.

Officials hope the extra revenue will make refiners increase production, easing the long queues and rationing at filling stations.

The rise is a reversal of policy. In September the government promised to keep fuel prices at current levels.

Correspondents warn that the move could add to rising inflation, which is already at record highs.

China has long had a system of price controls to prevent inflation and social unrest, according to a BBC correspondent in Beijing, Dan Griffiths.

But Beijing cannot ignore what is happening in the rest of the world, our correspondent says.

Oil prices have been sky rocketing, but Chinese refiners cannot pass those rises on to consumers and so they are losing money.Many have already cut their supplies to limit losses.

The National Development and Reform Commission, the country's main planning agency, said the government had decided to increase fuel prices to "guarantee domestic refined oil supply and promote energy conservation".

But the commission promised to shield the public from some of the increases.

"Prices of railway tickets, natural gas for civilian use and public transportation will not be raised to reduce the impact of the price hikes on the public," the commission said in a statement.

It also added that subsidies would be given to taxi drivers.

As oil prices on the spot market bid for more than $96/barrel, the ChinaCoalWatcher feels mildly vindicated and relieved from several years of being told "You're smoking something!  $100/barrel oil in our lifetime is an impossible alarmist dystopic nightmare fantasy".  I would respond "Cheap oil in an increasingly prosperous world full of billions of people who are just on the edge of being able to afford it (read: China) is the real fantasy. Buy some XOM."  But the rejoinder was unanimously "Nope.  The incentive is so high, the forces of capitalism and technology will develop practical cheaper alternatives for transport fuels long before then".

  Optimistic faith in the inevitable and rapid march of technological progress is a characteristic of our era - but I believe it is based mostly on people's experience with electronics and information technology - and not with other sciences which stagnated and came close to their theoretical limits decades ago.  Case in point - internal combustion engines have not gotten any closer to their theoretical maximum efficiency ratio of ml/sec vs horsepower (1:30) for decades. This is not for the lack of incentive, it's just that modern engines are so efficient, they are not just the best we can do at the moment, they are very close to being the best we can do period without using grossly impractical technologies like making them out of titanium. 

The whole phenomenon of the indescribable advancement in the power of electronic and information devices is largely the result of miniaturization.  After Nobel laureate (and Kansan) Jack Kilby invented the integrated circuit in 1958 while working at Texas instruments, and Intel started making the first silicon-based microprocessors in 1971, the physicists set to thinking about how small one could theoretically make such devices.  The answer was shocking. 

It seemed that one might be able to support a transistor on a surface containing less than 50 million atoms of silicon (and maybe even less!) with electrons oscillating at in the billions of cycles per second before problems of heat, leakage, and stability overwhelmed the system.  But in 1971, the best technology was using over 400 billion silicon atoms at a rate less than 5 million cycles per second. 

In theory, that meant you should be able to do at least 10 million times better one day on the same fundamental technology!  It wasn't a matter of natural limitation but of developing the skills and techniques needed to focus lasers and electron beams and etch elements on the same amount of silicon finer and yet finer.  Needless to say, they knew even then that there was almost unfathomably large amounts of room for improvement - "plenty of room at the bottom" as Richard Feynman might say - and that you could, for example, double the capability of a microprocessor every 18 months while still lowering the cost  for 40 years before you would run into the walls set by the Quantum laws of the universe. 

By the way - that may not be too many years off if one looks at recent trends in microprocessor clock cycles.  Over forty years ago, physicists also realized that the electromagnetic spectrum was capable of transmitting truly enormous amounts of data blindingly fast both at long and short range, and that it was only a matter of developing transmitters and receivers (themselves depending on developments in processors) to take advantage of an unexplored ocean of opportunity - which is the origin of the wireless revolution we are experiencing today.

But the larger point is one about alternative sources of energy.  What if energy production is more like internal combustion engines than microprocessors or wireless receivers?  This blog's thesis is that, for the medium term and for at least a generation - it is.