China drives its way to No. 1 oil importer, overtaking US(Read article summary)
China has topped the US as the biggest importer of oil in the world, according to government data released this week. It's more evidence of China's economic growth and America's shale drilling boom and increased efficiency, which has reduced its reliance on foreign oil.
China has edged out the US as the world's biggest oil importer.
The shift reaffirms China's ballooning growth and middle-class demand for cars and other amenities. Meanwhile, the US has slogged through five years of post-recession economic malaise. Americans are driving and buying less than before.
That's only half the story. The other half is one of American innovation in domestic energy conservation and resource extraction. A shale oil and gas boom has driven production to levels not seen in decades and efficiency standards have slashed household and vehicular consumption. The deployment of renewables and alternative fuels have contributed to a supply-demand balance that works very much in consumers' favor.
Suddenly, the US won't have to rely on foreign oil as much as it used to, and China will. That gives the US an economic and perhaps geopolitical advantage while China deepens its dependence on volatile, oil-rich countries in the Middle East.
"There’s no question that China will continue to grow – maybe not at strong rates as it has in past, but if you look at any metric relative to the US, their per capita vehicle ownership is still low so they’ve got lots of headroom to grow," says Aaron Brady, senior director at IHS Cambridge Energy Research Associates, in a telephone interview. "The bottom line is that their middle class is getting bigger and those people are buying cars and driving them."
China's reign as No. 1 importer began least month, according to data released earlier this week by the US Energy Information Administration. China used 6.30 million barrels per day more than it produced. Consumption in the US, meanwhile, outstripped production by 6.24 million barrels per day. That trend will continue through 2014, EIA projects.
It's likely to last even longer than that. China's economy – the world's second largest – has cooled in recent years, but it's showing signs of heating up again.
The country's gross domestic product is slated to rise 7.5 percent this year, according to China's deputy central bank governor, as quoted by state-owned news organization Xinhua. Passenger car sales in China rose 21 percent from a year ago in September, according to the China Association of Automobile Manufacturers, a semiofficial industry group. That's the biggest jump in eight months.
Dramatic increases in public transportation, fuel-economy standards, or gas prices could derail China's demand for oil, writes Kelly Sims Gallagher, associate professor of energy and environmental policy at Tufts University in Medford, Mass., in an e-mail.
And China has the third largest technically recoverable shale oil resources behind Russia and the US, according to a June 2013 report by the US Energy Information Administration. It is No. 1 in the world for shale gas. But China lags behind the US in developing its shale resources, and poor infrastructure, difficult terrain, and tricky geology may make it difficult for China to replicate the US's success with the controversial hydraulic fracturing and horizontal drilling of shale formations.
The US still faces its own energy challenges. And it's nowhere near its long-sought "energy independence."
"Despite increased domestic production, the United States finds itself intricately linked into the global economy and global energy markets ensuring that the United States will remain interested in those areas," writes Matthew Bey, an energy analyst at Stratfor, a geopolitical intelligence firm based in Austin, Texas, in an e-mail.