- ISIL creates all-female brigade to terrorize women into following Sharia law
- ISTOOK: Obama wants to be impeached
- Obama to Latin leaders: Help with border
- Military bans troops from Baptist church event honoring ‘God’s Rescue Squad’
- ‘Pocket drones’: U.S. Army developing tiny surveillance tools for the next big war
- Belgian cafe posts sign: Dogs allowed, but Jews stay out
- Gen. Dempsey: Pentagon studying Russian readiness plans not viewed ‘for 20 years’
- John McCain: Botched, two-hour execution of murderer is ‘torture’
- House GOP ready to move border bill
- Bomb squad called after live WWII artillery washes on Cape Cod beach
China will surpass U.S. in oil imports; shift in supply and demand could transform geopolitics
Question of the Day
China will become the world's largest importer of crude oil in October, surpassing the U.S. for the first time as the Asian giant's rising consumer class of drivers grows increasingly thirsty for fuel, the U.S. Energy Information Administration is projecting.
China already is the largest importer of oil from the troubled Middle East, taking away a distinction that plagued the U.S. since the 1970s. Its ascendance as the world's largest importer — even as U.S. dependence on Middle Eastern oil declines to negligible levels — could transform regional and world politics as the focus of global defense efforts for decades has been keeping open the vital oil shipping lanes leading from the Persian Gulf.
Juan Zarate, an analyst with the Center for Strategic and International Studies, said the U.S. should use the occasion of China's growing dependence on Middle Eastern oil and reduced U.S. dependence to rethink its longtime policy of bearing the lion's share of defense costs in the Middle East and act more in its economic self-interest.
"In Iraq and Afghanistan, American blood and treasure have been spent to establish security and functioning economies, but American companies and interests are often left on the sidelines as Chinese, Russian and other countries' companies profit from oil, mineral and other sectors," he said.
China has promoted its economic interests aggressively for years by openly courting oil exporters shunned by the U.S. and its allies, such as Iran, Sudan and Venezuela, to secure supplies, even if the effect is to support dangerous or renegade regimes.
"They are playing a new geoeconomic game, where economic power is leveraged aggressively for national advantage," he said, while the U.S. seems "unprepared to play this game" or respond in kind.
China's emergence as the world's biggest oil importer has been building for years, but grew particularly rapidly this decade with burgeoning car sales, which surged to more than 19 million last year. China, with its increasingly prosperous population of 1.3 billion, has been the world's largest market for autos since 2009.
That is causing China's consumption of oil to surge by 13 percent to 11 million barrels a day between 2011 and 2014, the energy agency said. China's manufacturing industries also are heavy users of oil. With China's domestic oil production at about 3 million barrels a day and growing slowly, that means it has had to escalate oil imports to satisfy demand.
China's growing oil needs are affecting the U.S. and its consumers because it now has a major and growing influence on the price of oil and other critical commodities that are set in global markets, said Carlos Pascual special energy envoy at the State Department.
"The inability of China and India to satisfy demand for oil will be a major driver of global oil prices" in coming years, he told a Bipartisan Policy Center forum recently, adding that "this conversation is critical to the future of U.S. national security policy."
While China's dependence on foreign oil is growing rapidly, U.S. dependence has been dwindling rapidly. Imports started shrinking dramatically in the U.S. last year as production of oil from shale deposits in North Dakota and Texas kicked into high gear.
U.S. oil production surged at the same time as more fuel-efficient cars mandated by the government and a trend among Americans to drive less caused a drop in U.S. oil consumption to 18.7 million barrels a day recently from a peak of 20.8 million in 2005, the agency said.
The combination of higher production and lower consumption led to temporary gluts of oil in the Midwest in the past few years that were exacerbated by bottlenecks blocking transport of some of the shale oil to U.S. refineries on the East and West coasts. That has prompted Gulf Coast refiners to use accumulating oil surpluses to produce gasoline and other refined products for export to nations in Latin America and elsewhere — a development that also has acted to sharply reduce net oil imports.
The sharp turnaround in oil imports and consumption helped cause a drop in the monthly trade deficit in June to the lowest level since 2009. Behind the change was a drop in net oil imports to the lowest in 15 years.
The plentiful and relatively cheap U.S. supplies of oil and natural gas pouring out of Midwestern shale deposits also has given a competitive edge to the U.S. in such energy-intensive industries as chemicals and aluminum. Many U.S. and foreign firms are building plants near prolific shale formations to take advantage of the gushers of cheap oil and gas.
While China has vast shale deposits, too, and is eager to tap those to satisfy some of its growing demand for oil and gas, analysts say, the Asian nation is years away from being able to exploit such unconventional oil sources as it lags the U.S. in technical expertise.
Gary Thayer, an analyst with Wells Fargo & Co., said the drop in oil imports and increased competitiveness of U.S. industry bode well for the U.S. economy.
"The last time the United States saw a similar surge in crude oil production was in the late 1970s and early 1980s when Alaskan crude oil production was on the upswing," he said. "It helped the U.S. trade deficit to narrow and the value of the U.S. dollar increased in the early 1980s after a decade of weakness," all of which led to a stronger economy and lower inflation, he said.
"Many of the same conditions exist again today," he said.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
- Economists see signs of another market bubble
- Crude oil will head north of the border to Canada
- S&P: Boeing to suffer if Ex-Im Bank killed
- U.S. job gains, unemployment dip push markets into record territory
- Unemployment falls to 6.1 percent amid U.S. hiring surge
Latest Blog Entries
TWT Video Picks
Second- and third-stringers eye 2016 if front-runner stumbles
- NAPOLITANO: What if our democracy is a fraud?
- ISTOOK: Obama wants to be impeached
- 'Pocket drones': U.S. Army developing tiny spies for the next big war
- 'We're coming for you, Barack Obama': Top U.S. official discloses threat from ISIL terrorists
- Michelle Obama says money in politics is bad, asks donors for 'big, fat check'
- Ted Nugent loses second casino gig for 'racist remarks'
- Russia shipping sophisticated weapons systems to Ukraine separatists
- EDITORIAL: Detroit's water 'spigot bigots'
- Obama orders Pentagon advisers to Ukraine
- Let it roll: D.C. Council hits Las Vegas on taxpayer's dime, leaves $14,000 tab
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world
Fighting in Iraq