The U.S. and China are over a barrel - Mercedes-Benz Forum

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post #1 of 11 (permalink) Old 04-29-2008, 03:49 PM Thread Starter
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The U.S. and China are over a barrel

The U.S. and China are over a barrel
In the costly competition for oil, cooperation is the wisest course.
By Michael T. Klare
April 28, 2008

Among the many reasons given for the recent surge in gas prices is China's soaring demand for petroleum. Because the Chinese are running around the world buying up every available barrel of oil, the argument goes, we Americans have to pay that much more to outbid them for the leftover pools of crude. And the fact that the Chinese yuan has been growing stronger while the American dollar is shrinking in value has only exacerbated the problem.

Unquestionably, there's some truth to this. China's consumption of oil rose from about 4.2 million barrels a day in 1997 to 7.8 million barrels in 2007, an increase of 86%, the U.S. Department of Energy reported earlier this year. More to the point, the percentage of this oil that had to be imported grew even more. In 1997, China supplied all but 1 million barrels of the oil it consumed each day from domestic fields; by 2007, the shortfall between domestic output and consumption had jumped to 4 million barrels, all of which had to be imported.

To obtain these additional barrels, the Chinese have, in fact, been shopping in some of the same foreign oil bazaars as the United States -- and, with more demand chasing a finite supply, prices naturally tend to rise.

But let's put this in perspective. In 2007, according to Energy Department figures, the United States consumed about 21 million barrels of oil a day, nearly three times as much as China. Even more significant, we imported 13 million barrels every day, a vastly greater amount than China's import tally. So, although it is indeed true that Chinese and American consumers are competing for access to overseas supplies, thereby edging up prices, American consumption still sets the pace in international oil markets.

The reality is that as far as the current run-up in gasoline prices is concerned, other factors are more to blame: shrinking oil output from such key producers as Mexico, Russia and Venezuela; internal violence in Iraq and Nigeria; refinery inadequacies in the U.S. and elsewhere; speculative stockpiling by global oil brokers, and so on. These conditions are likely to persist for the foreseeable future, so prices will remain high.

Peer into the future, however, and the China factor starts looming much larger.

With its roaring economy and millions of newly affluent consumers -- many of whom are now buying their first automobiles -- China is rapidly catching up with the United States in its net oil intake. According to the most recent projections, Chinese petroleum consumption is expected to jump from 8 million barrels a day in 2008 to an estimated 12 million in 2020 and to 16 million in 2030. American consumption will also climb, but not as much, reaching an estimated 27 million barrels a day in 2030. In terms of oil imports, moreover, the gap will grow even smaller. Chinese imports are projected to hit 10.8 million barrels a day in 2030, compared with 16.4 million for the United States. Clearly, the Sino-American competition for foreign oil supplies will grow ever more intense with every passing year.

How, then, should we respond to this challenge? One answer, favored by many in Washington, is to step up American political, economic and military involvement in Africa, the Middle East and Asia so as to enhance America's competitive advantage in the struggle for access to the world's remaining untapped supplies of crude oil.

This, in fact, has been the approach adopted by the Bush administration over the last seven years. It has involved repeated visits to such key oil suppliers as Azerbaijan, Kazakhstan and Nigeria by top U.S. officials, including President Bush, Vice President Dick Cheney and Secretary of State Condoleezza Rice, along with promises of economic aid and, on occasion, increased levels of military assistance. China, sad to say, has responded in kind, inflaming regional tensions and sparking a series of local arms races.

This competitive approach may give American companies a slight advantage in a few oil-producing areas, but it is unlikely to alter the big picture or reduce the cost of gasoline to American consumers. At the same time, it is sure to boost U.S. military expenditures and produce a greater risk of American involvement in overseas energy conflicts.

A far wiser course, I believe, would be to promote energy cooperation with China, rather than competition. Given that the United States and China are the world's two biggest users of petroleum -- a fuel whose worldwide availability is likely to peak at 100 million barrels or so per day in the next five years or so and then commence an irreversible decline -- it makes great sense for us to collaborate in the development of oil alternatives and energy-saving technologies.

Such collaboration could take the form of joint ventures to develop advanced biofuels (not derived from food crops) and transportation fuels extracted from coal (without releasing heat-trapping carbon dioxide into the atmosphere). It could also include the development of super-light vehicles, advanced hybrid engines and other energy-saving systems. Such endeavors have been discussed on a preliminary basis by U.S. and Chinese officials, so it is hardly utopian to envision a more elaborate and constructive undertaking of this sort.

Make no mistake: Intensified competition between the United States and China for access to the world's remaining supplies of oil (and other sources of energy) will inevitably add to the forces pushing gasoline prices skyward and will generate an increased risk of regional instability. Trying to fight China over oil is the wrong approach; we'd both be better off by cooperating in the search for petroleum alternatives.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author of "Rising Powers, Shrinking Planet: The New Geopolitics of Energy."
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post #2 of 11 (permalink) Old 04-29-2008, 06:17 PM
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Not to worry: China is helping Cuba develop offshore oil that the Current Occupant and His Brother, Former governor of Florida, agreed not to develop in international waters off Cuba & Florida.

I'm sure Floridians will be relieved to know that the Chinese and Cubans will strictly monitor the exploration for environmental impacts. I know I'm reassured.

Neither party wishes for this subject to come up. Guess why.

B

The biggest problems we are facing right now have to do with George Bush trying to bring more and more power into the executive branch and not go through Congress at all and thatís what I intend to reverse.

~ Senator Barack H. Obama
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post #3 of 11 (permalink) Old 04-29-2008, 07:29 PM
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What happened to Iraqi oil? Where are the spoils of war? How come our friends the Saudis are not flooding us with oil? Where are our friends?
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post #4 of 11 (permalink) Old 04-29-2008, 08:43 PM
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Perhaps it's raining?

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beware of fundamentalists

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post #5 of 11 (permalink) Old 04-29-2008, 08:55 PM
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Originally Posted by drewprof View Post
What happened to Iraqi oil? Where are the spoils of war? How come our friends the Saudis are not flooding us with oil? Where are our friends?

Dammit DP, Those ME guys have their hands full and enough problems right now, please it is not all about the US.........

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post #6 of 11 (permalink) Old 04-30-2008, 01:49 AM Thread Starter
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It has been estimated, that here in the U.S., 5% of the Worlds population uses 25% of the Worlds energy.
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post #7 of 11 (permalink) Old 04-30-2008, 02:18 AM
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What are the first world stats like
For energy consumption
USA vs Europe ?? etc,
just a thought
M
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post #8 of 11 (permalink) Old 04-30-2008, 05:07 AM
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Nice assesment but I think he is way understimating the amount of oil China will need per day by 2020.

In the city i live in, two years back there were 160,000 cars on the road and today its 1.6 million. New factories in this one province are opening on a daily basis.

ERIC.

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post #9 of 11 (permalink) Old 04-30-2008, 06:29 AM
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Food riots due to perception of supply problems. Great run-up in fuel prices due to perception of supply problems.

Imagine what would happen if Mideast oil was completely cut-off.

B

The biggest problems we are facing right now have to do with George Bush trying to bring more and more power into the executive branch and not go through Congress at all and thatís what I intend to reverse.

~ Senator Barack H. Obama
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post #10 of 11 (permalink) Old 04-30-2008, 06:45 AM
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Originally Posted by Botnst View Post
Food riots due to perception of supply problems. Great run-up in fuel prices due to perception of supply problems.

Imagine what would happen if Mideast oil was completely cut-off.

B
Yup, there may be a tad of panic

ERIC.

___________________________________________
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- George Bernard Shaw to Winston Churchill.

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