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Saturday, February 26, 2005

Resource Wars

Made in China used to be a joke. Not anymore. China’s share of our trade deficit was $162 billion dollars in 2004. Wal-Mart and Target are their main American outlet stores. The products are American factory quality (we moved them over there, remember?) and very affordable. China not only sells us our toasters and undies, but it also lends us the money to buy those Wal-Mart goodies on credit, refinance our homes, and fund our government debt. They even buy a portion of our home mortgages via Fannie Mae. Gulp.

China has joined the United States and Japan in developing strategic petroleum reserves, and is aggressively securing energy and mineral resources world-wide, particularly in places that cause much consternation in Washington: Iran, Venezuela, and many conflict ridden states of Africa, not to mention, our own backyard of Canada. In 2004, China's oil consumption increased by 40 percent, to 6.5 million barrels a day. U.S. domestic demand is 21 million barrels a day. U.S. demand is increasing by about 500,000 barrels per day per year. China's is increasing by about 1.5 million barrels per day per year.

In the not-too-distant past, China was viewed as an ideological opponent, not an economic competitor. Today, that is a much different story and challenge. With continued population growth and economic expansion in the developing countries like China and India, it doesn’t take a rocket scientist to realize that the demand for resources will soon exceed supply. It’s quite apparent that many of the poorer countries will get the short end of the oil supply and other commodities. It’s also goes without saying that the United States or China will not get all the oil they require either.

With only a small fraction of its poverty ridden 1.3 billion population just now getting their first car and refrigerator, it is highly unlikely that the rest are not going to develop a taste for the American way of life also. In 2001, the Chinese purchased 2.2 million cars. By 2004, its internal automobile market exceeded 5 million. In the next 15 years, China's car market is expected to surpass 20 million, exceeding that of the United States. Thus, we are left with the beginning of a scramble to secure a supply of energy to meet this demand. This can only lead to confrontation and resource wars. For further reading on the ominous portents of awakening a sleeping giant, try Bill Ridley’s article, China and the Final War for Resources .

22 comments:

deffeyesacolyte said...

Aaron:

The numbers for China are almost beyond comprehension. The government plans to achieve 60% to 65% urbanization in the next 25 years - a reasonable aspiration if one is measuring standards of economic modernization. The only problem is that means another 345 million people will move from the countryside to the cities! That's a lot of cars, electric power, buildings, roads, industrial plants, etc.

China is not providing us with transparency about its consumption of oil. And, I suspect, it ain't about to start. The number is going up, way up.

deffeyesacolyte said...

Aaron:

The numbers for China are almost beyond comprehension. The government plans to achieve 60% to 65% urbanization in the next 25 years - a reasonable aspiration if one is measuring standards of economic modernization. The only problem is that means another 345 million people will move from the countryside to the cities! That's a lot of cars, electric power, buildings, roads, industrial plants, etc.

China is not providing us with transparency about its consumption of oil. And, I suspect, it ain't about to start. The number is going up, way up.

amorando said...

Given the above described situation in China, one that is likely to keep going with the vengeance, the US would do well to take an example from Cuba. We must first recognize that to defend against the economic wareful, where China has most of the tools, our response should be to greatly reduce our consumption of petroleum and return to the land. Our model should be Cuba. There's a good article on Cuba on www.energybulletin.com

That's my response if I can achieve it. I will be going as closely to it as possible. I will not be on the side of the people who think we can stay on top with our military. That attitude prevails now and is taking us deeper into the problem rather than pulling us out.

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