The Incontiguous Brick

October 22, 2007

Oil, China and global production

Filed under: China,Environment,Oil,Warnings — iknowkeith @ 9:40 am

A new report came out from an energy watch group in Germany today. If the report is accurate, peak oil already happened last year and we can expect a 7% reduction in production every year from now on. How bad is this?

On the brighter side, it is about time we all move on and stop burning stuff to power our world. We have been burning stuff since the beginnings of civilization and maybe this is just what we need to move on to something better. It could be a little painful for a while but we might all be better off in the long run.

Unfortunately, the U.S. is not the only economy that depends on oil. Oil has been the great engine of modernization and economic growth in every successful economy in the last 100 years. The latest booming economy is China, but this time it is facing a dwindling oil market rather than expanding.

In 2004, the LA Times published an article titled, “U.S., China Are on Collision Course Over Oil.” Here is an excerpt:

Sixty-seven years ago, oil-starved Japan embarked on an aggressive expansionary policy designed to secure its growing energy needs, which eventually led the nation into a world war. Today, another Asian power thirsts for oil: China.

While the U.S. is absorbed in fighting the war on terror, the seeds of what could be the next world war are quietly germinating. With 1.3 billion people and an economy growing at a phenomenal 8% to 10% a year, China, already a net oil importer, is growing increasingly dependent on imported oil. Last year, its auto sales grew 70% and its oil imports were up 30% from the previous year, making it the world’s No. 2 petroleum user after the U.S. By 2030, China is expected to have more cars than the U.S. and import as much oil as the U.S. does today.

Optimists claim that the world oil market will be able to accommodate China and that, instead of conflict, China’s thirst could create mutual desire for stability in the Middle East and thus actually bring Beijing closer to the U.S.

History shows the opposite: Superpowers find it difficult to coexist while competing over scarce resources.

The article cites a possible conflict over Saudi Arabian oil because that is the largest supplier in the world and China and the US are both customers. However, that was before Hugo Chavez pledged to fuel China and turn away from the United States. Venezuela provides 11% of U.S. imports but is turning toward China as a new customer and partner. Now the US could be faced with a violent conflict much closer to home.

The article was also published with peak oil being a distant problem.  Now it may already be hear and China’s demand is already putting a strain on the world market.  There are a number of places where the battle over oil could be fought as the US or China becomes desperate.  Sudan, Iran, Nigeria all are major producers and have strong ties with China already.  Some have called for the US to get involved in one way or another with these oil producers already  over nuclear of human rights issues.  But the flashpoint could be oil when it comes to US and China…  and it could be soon.

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