I HEARD ON THE NEWS LAST EVENING

that the State of Hawaii is instituting price controls on gasoline. The newscaster actually said: "We look forward to seeing how this works." I'll tell you how it will work: there will be less gas available in Hawaii than there otherwise would be. It's a good thing our central planners here in the U.S. can crank open the reserves and flood the market. Who said socialism was a failed experiment? The Soviets just didn't have the right leader: George W. Bush.

Of course, leave it up to a nutball conservative to blame the rise in oil prices on John Kerry. Here's another lesson in basic economics: a producer can't pass the tax forward to the consumer by tacking it on to the prevailing market price. I suppose he is right that government actions reduce the supply of oil compared to what it otherwise would be. Still, you can't prove this is behind the rise in oil prices. A huge increase in demand for oil also puts upward pressure on the world price.

The trio have one thing in common -- their production is not growing. PetroChina and Sinopec's oil and gas production were virtually flat, while CNOOC's output growth of 2.9 percent was below expectations.

Half of PetroChina's crude output comes from the Daqing oil field in northeast China, where output has been sagging. Sinopec's Shandong-based Shengli oilfield, which accounted for most of its crude output, is also getting depleted.

PetroChina's upstream capex rose 16 percent to 59 billion yuan last year, but its output grew just 2.2 percent. Mirroring the difficulty of finding oil in China, PetroChina's total oil and gas reserves rose just 7.9 percent to 17.8 billion BOEs at the end of 2003, 40 percent of which is gas.

PetroChina plans capex of 17.4 billion yuan on gas this year, up from 13.5 billion yuan in 2003. The main project is the mega West-to-East pipeline, which is expected to pump 12 billion cubic metres a year by 2007.

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