COMMENTARY
Wrong approach to fight China over oil
By Michael T. Klare
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Among the many reasons given for the 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 theory goes, Americans have to pay 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 percent, 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 been shopping in some of the same foreign oil bazaars as the United States. With more demand chasing a finite supply, prices rise.
But let's put this in perspective. In 2007, the United States consumed about 21 million barrels of oil a day, nearly three times as much as China. We imported 13 million barrels every day, a vastly greater amount than China's import tally. So, although it is true that Chinese and American consumers are competing for overseas supplies, edging up prices, American consumption still sets the pace.
The reality is that as far as the run-up in gasoline prices is concerned, other factors are more to blame: shrinking oil output from producers such 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 looms larger.
With its roaring economy and millions of newly affluent consumers — many of whom are 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 officials in Washington, D.C., is to step up American political, economic and military involvement in Africa, the Middle East and Asia to enhance America's competitive advantage in the struggle for access to remaining untapped supplies of crude oil.
This has been the approach adopted by the Bush administration. It has involved visits to key oil suppliers including Azerbaijan, Kazakhstan and Nigeria by top U.S. officials, including President Bush, Vice President Dick Cheney and Secretary of State Condoleezza Rice, with promises of economic aid and increased levels of military assistance. China 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. 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 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 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 be better off by cooperating in the search for petroleum alternatives.
Michael Klare is a professor of peace and world security studies at Hampshire College. He wrote this commentary for the Los Angeles Times.