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Sol Sanders Archive
Tuesday, July 27, 2009     INTELLIGENCE BRIEFING

Geopolitical threat: China's and America's growing
need for imported oil

A tiny mid-July ballet among American, Chinese and UN statisticians camouflages a growing geopolitical threat: China’s unquenchable thirst for and America’s dependence on imported oil.


Also In This Edition

When a UN’s International Energy Agency official 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 Beijing with its piquancy for gigantism — from population overcounts to the Olympics extravaganza to the elaborate Shanghai Exhibition to its growing bloated infrastructure — has tried for second place. True, America does consume per capita five times as much energy. But as the IEA notes, as with most Chinese statistics, Beijing’s 2009 energy numbers don’t match its GDP claims. It’s no secret that subsidies, general inefficiency and corruption have gorged Chinese consumption.

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

But 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 this year, China consumed almost 10 million barrels daily, half 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 kerosene lamps [mei po] to create Chinese consumers was 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 China market.]

Today, despite President Barack Obama’s highly subsidized “renewable energy resources” schemes, most experts agree 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 from diminishing reserves, and more efficiency, in part produced by higher prices and mandated auto mileage standards. There is, of course, the present dip — due, only temporarily one hopes, to the economic downturn. But in 2008 America consumed almost a quarter of the world’s petroleum, more than half 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 are likely to increase their imports rapidly if and when the world economy recovers.

Beijing, despite its success in nailing deals — some real, 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 best customer for Saudi Arabia — with the world’s largest reserves — and Beijing has bought heavily into renewed Iraq production — the world’s second.

Ironically, that energy lifeline depends on the U.S. Navy’s policing the Indian and Pacific Oceans and technology transfers from U.S and Europe-based producers. [Beijing’s refusal to honor the UN Iran embargo has left it stranded alone in the huge but stalled Persian Gulf South Pars reserve with partners retreating before Washington sanctions.]

Beijing is busily attempting detours. But pipelines from Central Asia into troubled westernmost Singkiang province, thousands of miles from coastal industries, off and on deals with Moscow enmeshed in disputes over routes and pricing, a proposed Burma pipeline to isolated Yunnan province to avoid the Malacca Strait chokepoint, an even more ephemeral pipeline from a Pakistan port at the entrance to the Persian Gulf, would still be Band-Aids.

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

The fact that Beijing now has just had its largest accident — but no competitor to the BP spill in the Gulf of Mexico — and pollution of north China fisheries adds another parallel.

China’s no-holds-barred attempts at access to foreign oil already have complicated Washington foreign policy from Nigeria to Sudan to Burma. In fact, Beijing’s growing consumption is the primary cause of rising world fuel prices. [And, adding spice, that is impacting China’s competitive export pricing for Western and Japanese markets.]

Competition for access to world oil will grow. Add that to growing friction over Beijing’s refusal to help block North Korean nuclear weapons, export subsidies aggravating the U.S. balance of payments hemorrhage, and growing public truculence of Chinese military spokesmen and you have more than combustible oil.

It was, after all, petroleum access that was the final straw in Japan’s 1930s conflict with the U.S. when Washington’s oil embargo brought on 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 W. Sanders, (, writes the 'Follow the Money' column for The Washington Times on the convergence of international politics, business and economics. He is also a contributing editor for and An Asian specialist with more than 25 years in the region, Mr. Sanders is a former correspondent for Business Week, U.S. News & World Report and United Press International.


Who was against birth control and against China’s one-child policy? Ronald Reagan and George Bush. In 2005, Stephen Mosher, president of the Population Research Institute, said "The world today could feed about 12 to 14 billion people.”

luc      9:50 a.m. / Wednesday, July 28, 2010

It is silly to threaten any major nation with an oil embargo today. There are a very limited number of super tankers in the world. If there is war of that scale, it is more likely than not that all or substantially all of those tankers would end up sunk, so nobody gets any oil imports.

Zhuubaajie      5:26 p.m. / Tuesday, July 27, 2010

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