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 2nd May 08 - Michael T. Klare, LA Times
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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