Look at this imbalance: The average American consumes 25 barrels of oil a year. In China, the average is about 1.3 barrels per year; in India, less than one.
So as the 2.4 billion Chinese and Indians move to improve their living standards, they're going to want more oil - likely more than can be produced.
That perceived shortage is setting off an intensifying scramble to tie up oil reserves around the world. So far, China has been the most aggressive player. But the competition is just getting going.
The pattern is clear. China has been weighing buying Unocal, a major US oil firm. Last month in Beijing, Venezuela's President Hugo Chávez promised to open that nation's oil and natural gas fields to China. Russia, in effect renationalizing the giant oil subsidiary of Yukos, may offer China a 20 percent chunk of the new firm.
China's efforts to tie up oil and gas resources - in places such as Iran, Saudi Arabia, and Sudan - have not been cheap. But it has an unfair advantage, says Michael Lynch, president of Strategic Energy and Economic Research in Amherst, Mass. Its national oil firms have access to cheap capital from government institutions - and few limits on entering areas seen as sensitive for publicly held Western firms. (Think violence-prone Sudan.)
The challenge is huge. For China and India to reach just one-quarter of the level of US oil consumption, world output would have to rise by 44 percent. To get to half the US level, world production would need to nearly double.
That's impossible. The world's oil reserves are finite. And the view is spreading that global oil output will soon peak.
As a result, "the growing demand for oil is leading to a growing global conflict," warns Amos Nur, a geophysicist at Stanford University. The 1991 Gulf War, the 9/11 attack, and the current war in Iraq are skirmishes that could "pale in comparison with the looming potential conflict over oil with China."
Oil has often influenced history. An American and British oil embargo on Japan, which was close to running out of fuel for its growing navy and empire, was one reason that island nation advanced a plan to attack Pearl Harbor to Dec. 7, 1941. That move brought the US into World War II, at a time when world oil output still was rising. A peak - when it comes - will be a major event shaping geopolitical policy and future prices.