1.3 Billion Reasons To Worry About Oil - Newsday

[hatrack]

"American leaders have good reason to worry about the price of oil. Oil price shocks can play a decisive role in ending a presidency, as in the cases of Presidents Jimmy Carter and George H. W. Bush. The Nov. 2 election may well hinge on the cooling of the economic recovery caused by sustained high levels of oil prices. But that's not really what the next president should be so concerned about. The real oil shocks - much more damaging and sustained than ever before - will come a bit later, but much sooner than anyone had expected, from a part of the world not even discussed seriously in the current campaign: China.

With 1.3 billion people, a phenomenal rate of economic growth, and an insatiable consumer demand for cars, China will soon come into direct conflict with the United States over oil, the world's most valuable and increasingly scarce industrial commodity.

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It's estimated that China could have nearly 30 million automobiles by 2010. By 2030, China is expected to have more cars than the United States and import as much oil as the U.S. does today. Already, China has overtaken Japan as the world's second biggest importer of oil, after the United States. And its appetite is huge and growing. As Daniel Yergin of Cambridge Energy Research Associates puts it, "China has gone from being a minor player in world commodity markets, if a player at all, to being the decisive dynamic factor today. In terms of oil, 40 percent of the entire growth in oil demand since the year 2000 has been China."

In this quarter alone, China's demand for oil is projected to increase 21 percent. That follows a 19-percent increase during the first quarter of this year. Nor are Chinese consumers, especially those in the growing middle class produced by a booming technology sector, particularly interested in fuel-efficient small cars. Gas-guzzling sport utility vehicles are not simply an American passion. They are in great demand in China, too. In a report from China broadcast on National Public Radio in June, a 35-year-old woman in Beijing, Sia Lan, an executive in China's expanding advertising industry, said she, like many other of her friends, prefers to drive SUVs. "I have a sedan car, too, which I used to drive to work because my Jeep guzzles a lot more gas," she said. "But I prefer my Jeep because I can see over all the other cars."

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[Bernardo de La Paz]

1. Good article. Obvious Trend, but it needs Mind Share . . . nt

[ramapo]

2. And when everyone has an SUV?

Nice to see that oneupmanship is not confined just to Americans.

The rationale that having an SUV is good because it allows you to see over the lowly car works until there are more SUVs than cars. Then what? Bigger, higher, heavier, and less efficient vehicles?

How moronic. How depressing.

I have come to hate SUVs. They are dangerous, pure and simple. If your car gets broadsided by an SUV with its high bumper, you have an excellent chance of being dead. The friggin' thing comes right through your window.

You can't see around them. If you're parked next to one then you guess that's it safe to back out.

So I guess I should run out and buy a Hummer so I can pay $50+ a fillup just so I can be bigger and badder than the next guy.

[Dogmudgeon]

3. Does China have a future in oil-based energy?

I'm not sure that oil will stay cheap enough long enough for China to get more than a few years of Western-style development. Even if they heavily subsidize petroleum development, like we have done in the West, it won't be enough to alter the economic reality that oil is going to become a much more expensive commodity soon.

If I Ruled The World, I'd start sinking lots of money into the development of ultralight, ultra-efficient personal transport, and into passenger and cargo airships. I'd sink even more money into the development of high-output, durable solar panels, and I'd give everybody a tax break for converting "roof real estate" into solar collection space. I'd also encourage development of a 13.8-VDC house current system to power a new generation of LED-based lighting, low-power computers and TVs, and other such household appliances.

Eh, but what do I know?

--bkl