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China's Global Quest For Oil
China's economic growth raises price of oil; foreign rivals concerned

Raymond McDonald (ramacdo) Email Article Print Article

Published on 2006-05-08 15:14 (KST)

A major concern of the American public in the past year has been the rising price of fuel. As the world's largest consumer of oil, the U.S. price for petroleum remains the cheapest -- almost half of what you would pay in Europe or Japan. Nonetheless, the cost for a gallon of petrol in the US is nearing $3 per gallon and has become a major issue in the nation's politics.

Many blame high oil prices on American foreign policy -- namely the war in Iraq and the insecurity of the Middle East region. However, the biggest threat to U.S. oil dominance comes from the world's most populous nation, China. China has overtaken Japan as the world's second largest oil consumer, and with a population over four times the size of America's, it wont be long until China overtakes the U.S. for the number one slot.

The growth of China's oil consumption is directly linked to the increased economic freedoms of cities on its coastal regions. The nation's economic growth since the 1990's has been nothing short of incredible. In 2005, the economic growth rate was 9.9 percent, larger than that of any other nation. A rising Chinese economy means that there are also an increasing number of Chinese people with disposable incomes. With this comes an increased opportunity for average citizens to purchase cars.

In 2002, Chinese demand for cars increased by 56 percent; then in 2003 it increased by 75 percent. The most recent figures suggest that the number of car owners in China now stands at somewhere in the region of 25 million. So that means there are tens of millions of people who purchase petrol who didn't a decade ago. With the world's oil supplies beginning to dry up, this means that the cost of petrol grows even more expensive throughout the world. Forecasts predict that in the year 2020, China will need a minimum of 14,200,000 barrels of oil per day.

The Chinese people's burgeoning demand for oil means that the nation's own oil reserves are no longer sufficient, so that it now has to search the world for oil supplies. An oil pipeline from Kazakhstan into China -- the 988-kilometer long Atasu-Alashankou pipeline -- is nearing completion and will eventually pump 20 million tons of oil into China. This is just one of many recently built oil pipelines from Russia and Central Asia into China.

However, demand is such that China has to look beyond its former communist neighbors. For the past few years it seems there has been a never-ending flow of Chinese diplomats to Nigeria, one of the worlds poorest nations. Nigeria has oil and needs money; China has money and needs oil, so they seem like perfect trading partners. At the end of April, Chinese president, Hu Jintao arrived in Abuja, Nigeria to sign a deal in which China will pay 4 billion dollars in exchange for four oil exploration licences.

China is said to still be looking throughout Africa for cheap and exclusive sources of oil. They have made similar efforts in South America, and are now receiving oil from Brazil, Argentina, Venezuela, and Ecuador.

International critics claim that China is seeking to secure oil contracts in nations with appalling human rights records that America, Japan, and Europe refuse to deal with. China has oil interest in Kazakhstan, Myanmar, Sudan, Chad, and the Republic of Congo -- countries whose human rights records outrage the developed world. Oil trade between China and Iran has increased, with China spending roughly US$100 billion on developing one large Iranian oil field. Iran is frequently at odds with the U.S., Israel, and Europe, making China's involvement with it an unpopular decision internationally.

So while many nations are critical of its methods, China will continue to attempt to quench its thirst for oil. The countries government has a much simpler view on the situation, "The world has the oil, and China has the money," says Chen Huai, who is a member of the Chinese cabinet run Development Research Center. It seems like the rest of the world will just have to pay the price for China's increased fuel demands as they are only going to increase.

©2006 OhmyNews
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