How will Chinas energy consumption effect the West?

You can’t turn on the TV or open a magazine these days without reading about the rise of China and how they will be the next economic superpower within the next few decades.

China has 1.3 billion people living within its borders and an economy growing at over 10% per year. For energy consumption to keep pace with economic growth China will have to harness every fuel source available including renewable energy and nuclear power. There is not enough gas and oil in the world to satisfy China, not with it’s neighbour India with 1 billion people also having a huge demand for the same resources. An increase in the rise in personal car ownership alone could mean an extra billion cars on the road worldwide within the next 10 years. The majority of these will be in China and India. While the West is considered developed and is growing slowly, the Chinese economy is still growing fast and is expanding the range of products and services that it offers to the West. Some of these products that are manufactured such as plastics and chemicals will require even more oil. As the Chinese economy expands then so will the demand. As people move from urban to rural areas, the use and availability of electricity and gas in the home will also increase causing further strain on its reserves.

This growing economy needs the energy to drive this growth, there is only a limited amount of fossil fuels in the world and the oil and gas will not last for ever. This is leading to increasing competing demands for a countires resources, be that in Latin America or Africa. It also means that everybody buys oil from countries that have appaliing human rights issues. If America stops buying oil from Sudan because it is persecuting its citizens….China steps in to buy the oil and vice versa in countless countries around the world. Until recently, Chinese companies seemed most comfortable operating in locations not dominated by the major oil companies often owned by UK or USA companies. This means that countries like Angola and Iran have partnerships and joint ventures with the Chinese. For example, over half of Chinese overseas oil production currently comes from Sudan. In 2005 the Chinese wanted to buy a USA oil company but congress blocked this on the basis that national energy security was at stake. There is a little irony in that USA companies expect to buy energy companies all over the word, but if a key competitor wants to buy one of theirs and is even offering a higher price then the deal is blocked.

Nobody can argue that China now plays a key role in the supply and demand of many global commodity markets including steel, cement, and oil. This need for resources combined with the bags of cash from its economic growth means that China can afford to buy any oil field and rights anywhere in the world. A position that only the USA held in the past.

Some argue that the allied forces only went to war in Iraq to get their hands on the oil, time will tell if this true as oil production is currently lower than when Saddam was in power due to sabotage and security problems. Will the next war have oil as its stated aim and not Weapons of Mass Destruction?