- The Washington Times - Sunday, July 25, 2010


The miniature mid-July ballet danced by American, Chinese and U.N. statisticians only obscures a much larger geopolitical drama: China’s unquenchable thirst for and America’s unbreakable dependence on imported oil.

When an official from the U.N. International Energy Agency last week named China the world’s No. 1 energy consumer, surpassing the U.S., Zhou Xi’an, a Beijing energy official, quickly snapped: “We should be on guard with those exaggerated statistics, and what’s more, prevent the issue from being politicized.”

It may be the first time that a Beijing with a clear propensity for gigantism — from population overcounts to the Olympics extravaganza to the elaborate Shanghai Expo 2010 to its growing, bloated infrastructure — has shown a preference for second place. True, Americans do consume five times as much energy per capita as their Chinese counterparts. But, the IEA notes, as with most Chinese statistics, Beijing’s 2009 energy numbers don’t match its claims of gross domestic product. It’s no secret that subsidies, general inefficiency and corruption have inflated Chinese consumption levels.

There are other reasons for Beijing’s sensitivity. In 2007, China zoomed by the U.S. as the world’s largest producer of greenhouse gases. Getting most of its electricity from coal, the dirtiest fossil fuel, Beijing is under growing pressure to clean up its act.

But Mr. Zhou’s irritability hints at something far more significant.

In the early 1990s, Beijing became a net oil importer. And demand is growing exponentially as China moves into the motor age. In 2009, China produced 13.79 million cars, the world’s largest market. By June 2010, China consumed almost 10 million barrels of oil daily, half of that total imported.

In several ways, the U.S. and China may be returning to an old petroleum symbiosis. In the industry’s earliest years, John D. Rockefeller’s flamboyant distribution of millions of free Mei Foo kerosene lamps to Chinese consumers was just part of building his monopoly. (Alice Tisdale Hobart’s novel “Oil for the Lamps of China” is a good read on an earlier generation’s fascination with the Marco Polo myth of an inexhaustible Chinese market.)

Today, despite President Obama’s highly subsidized “renewable energy resources” schemes, most analysts agree that the U.S. for decades will continue to depend on fossil fuels. U.S. oil imports plateaued in the new century because of increased domestic production and greater efficiency standards, in part produced by higher prices and higher auto mileage mandates. There is, of course, the present dip because — one hopes temporarily — of the economic downturn.

But in 2008, the U.S. still consumed almost a quarter of the world’s petroleum, more than half of that imported. Between them, the U.S. and China now burn nearly a third of the world’s total. Predictions for a flattening of China’s growth and improved energy efficiency are largely speculation. So both countries are likely to increase their imports rapidly if and when the world economy recovers.

Beijing, despite its success in nailing down deals — some lasting, some ephemeral — with would-be suppliers from Cuba to Angola to Kazakhstan, faces some hard realities. As with most consumers, China’s oil spigot turns on in the Persian Gulf. China is already the biggest customer for Saudi Arabia, with the world’s largest reserves, and Beijing has bought heavily into renewed production in Iraq, which has the world’s second largest reserves.

Ironically, China’s energy lifeline depends on the U.S. Navy’s policing of the Indian and Pacific Oceans, as well as critical technology transfers from American- and European-based producers.

Unhappy with that dependence, Beijing is busily seeking detours. But pipelines from Central Asia into troubled westernmost Xinjiang province, thousands of miles from coastal industries; off-and-on deals with Moscow enmeshed in disputes over routes and pricing; a proposed pipeline in Burma to isolated Yunnan province; and an even more speculative pipeline project from a Pakistani port at the entrance to the Persian Gulf all would still be Band-Aids on the bigger problem.

So as domestic energy costs rise, oil is increasingly a major concern for Chinese planners, as it is with Washington.

That Beijing has just had its largest oil-related accident and is experiencing rising pollution levels of fisheries off northern China only adds to the parallels faced by planners in the two capitals.

China’s no-holds-barred attempts at access to foreign oil already have complicated Washington foreign policy in countries from Nigeria to Sudan to Burma. In fact, Beijing’s growing consumption is the primary cause of rising world fuel prices.

Competition for access to world oil will grow. Add that to other frictions in the Sino-American relationships — from Taiwan to North Korean nukes to persistent trade and currency imbalances — and it’s not just the oil that may soon be combustible.

It was, after all, petroleum access that was the final straw in Japan’s 1930s conflict with the U.S., when Washington’s oil and steel embargoes in the summer of 1941 were followed just months later by the attack on Pearl Harbor. No one would argue that Chinese and American relations have reached that stage. But that history is all too familiar to be dismissed.

Sol Sanders, veteran foreign correspondent and analyst, writes weekly on the convergence of international politics, business and economics. He can be reached at solsanders@cox.net.



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