Michael T. Klare: The U.S. and China are over a barrel

In the costly competition for oil, cooperation is the wisest course.

Among the many reasons given for the recent 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 argument goes, we Americans have to pay that much 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%, 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, in fact, been shopping in some of the same foreign oil bazaars as the United States — and, with more demand chasing a finite supply, prices naturally tend to rise.

But let’s put this in perspective. In 2007, according to Energy Department figures, the United States consumed about 21 million barrels of oil a day, nearly three times as much as China. Even more significant, we imported 13 million barrels every day, a vastly greater amount than China’s import tally. So, although it is indeed true that Chinese and American consumers are competing for access to overseas supplies, thereby edging up prices, American consumption still sets the pace in international oil markets.

The reality is that as far as the current run-up in gasoline prices is concerned, other factors are more to blame: shrinking oil output from such key producers 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 starts looming much larger.

LA Times