April 22, 2008 1:55PM
Where Will China Turn for Oil?
By Alexis Glick
I know, you see the title of this blog and think, oh no, not another China story. Yes, it is! Yes, China is all the rage in anticipation of the Beijing Olympics but there is MUCH more to this China story than the Olympics. It’s called oil and China’s demand is growing so precipitously that it may threaten our long-term national security and the price we pay at the pump.
This morning Mitch Reiner from Capital Investments Advisors joined me from Atlanta and Jeremy Haft, author of the “All the Tea in China” joined me at George Washington University where I anchored the show.
Why should you care about this story?
1. By 2010, China is expected to have 90x more cars on the road than in 1990.
2. Energy prices and rising commodity prices are affecting labor costs and causing many factories where we make many of our products to shutdown.
3. Their oil reserves at current levels will only meet demand for the next couple of decades, maybe less. They are importing more oil every day. The issue is with whom and at what costs. Currently 58% of China’s oil imports come from the Middle East. By 2015, that is projected to be 70%. What will the Chinese offer as barter? That’s the issue! Will arm sales proliferate in those countries and get in the hands of terrorists if the Chinese feel they need to make deals to get more long-term oil?
Take a look.
Comment by Justin
Apr 22nd, 2008 at 2:55 pm
They could always put our treasurey notes on the market too. Of course, I’m not so sure the Arabs would accept them as payment. We’re in trouble folks. I’m not too worried though. If/when it all comes crashing down, our family can always fall back on the land that sustained our ancestors. May God always be with those faithful to his name.
Comment by chuck harrison
Apr 22nd, 2008 at 3:00 pm
With the barrel oil price closing in at 120$ it’s going to effect the entire community of Vickbsurg. In fact the local paper here had an AP article about the rising prices. Already the gas prices here have hit at 3.51. Where in Clinton it’s ten cents cheaper than here. The reason for this is Pantry Inc is the price leader. Most of the gas prices here are price in the range from 3.45 to 3.53. Prices are slightly higher becouse there is now competition. But in May Kroger which is strong stock is going open to thier gas center here next month. Why not get a Kroger VP on your show and inquire about Waring Oil LLC of Vicksburg Ms about the gas pumps and not supplying with gas over the gas pumps. It wouldn’t hurt but it shows how far like private companies like Waring Oil LLC would go to keep price controls in place at the expense of the locals. U see Kroger in Clinton Ms has gas pumps and the locals went there to get cheap gas. Waring bullied Walmart the sameway over the gas pump issue. Why not make this jobber who doesn’t have a corporate website an newstory? It wouldn’t hurt. Waring gets his oild from the barges from the pipeline here in Vicksburg. So why not look and see where these jobbers and convenient store chains play a role in gas pricing? The post didn’t get all the facts about gas pricing and why not call on the President of the Ms Petroleum Association and inquire about Vicksburg ms and how this port’s prices are at Northease Average Prices. There are angry locals downhere. By the way Vicksburg Ms is the home of three gov’t agencies: USACE,ERDC,and the Ms River Commmission. It’s always the locals here who are getting the shaft with high prices and I suspect the Us Army here is too.
Comment by Bill Ryan
Apr 26th, 2008 at 3:34 pm
The problem with our current economy always has been China. We are a free market trying to compete with government backed business plan to wipe out their competition by keeping prices for their goods artificially low. China’s business plan is flawed. Their economy will eventually crumble because they do not have the infrastructure to support current production.
The long term answer is to stop depending on China’s production capabilities to grow our economy and start investing in our own. Oil is the tip of the economic iceberg that China’s business rides on and any company that needs them to survive will sink with them. Build and buy American for anything that lasts more than a year and when the inevitable happens you will not be part of it. China has made their bed and getting into it with them does not have to be a foregone conclusion for the United States.
Comment by bruce
Apr 26th, 2008 at 3:58 pm
Wait until china and Russia (huge oil reserves)decide to work together and combine their communist resources to furhter their agenda,unless,of course,the middle eastern sheiks haven’t already bought all our assets.
Comment by Ring Wise
Apr 27th, 2008 at 12:03 am
This discussion failed to mention that China is getting its energy supply from Iran.
In 2004, Sinopec Group signed a US$70 billion oil and natural gas agreement with Iran. Sinopec Group will buy 250 million tons of liquefied natural gas over 30 years from Iran and develop the giant Yadavaran field. Iran is also committed to export 150,000 barrels per day of crude oil to China for 25 years at market prices after commissioning of the field.
This agreement is well known in oil and gas community, but it has not found its way into “talk radio”. I suppose it cannot considered there because fighting Iran is a fun, safe topic. Unfortunately, this 2004 means that fighting Iran would lead to fighting China — not a fun, safe topic.
Comment by steveo
Apr 27th, 2008 at 6:05 am
i think that in the global market it is time for America to tack the led again in reducing claims that benefit such issue of time for technology + dependable oil what can be made to exist the interest to a diplomatic control changing description supply it worked in the years after the second world war ask for orders by the double requirement and reject half before its sent the over flow of orders mack good trade to barter with.
Comment by Victor
Apr 27th, 2008 at 4:19 pm
Where is China go to get their oil?
To answer your question, China is going everywhere for oil. The Chinese are investing in oil production in the Middle East, South America, California, Texas, the North Sea, Africa, Indochina, and in the republics of the former Soviet Union to name a few places. They are not whining about the price of gas, they are buying up and locking down the crude oil however and wherever they can.
The question should be where is the US going to go for oil? The press the Democratic politicians are selling the American people the line that ExxonMobil, Chevron, et al are evil, greedy, beasts who must be crippled for the entertainment of a hysterical public. And the fools at the pump are buying it. While China locks down the world’s oil for China’s future, the U.S. Congress wants to shoot America’s energy warriors in the guts and watch them bleed.
In the 70’s the government fixed prices. That produced long lines, odd/even day fueling, 5 gallon maximums, and stations closed until next Tuesday when the tanker truck comes again, maybe. The press loved it, but they are not talking about it today.
Price deregulation in the 80’s ended the lines and put gas back in everyone’s tank at sharply lower prices. Then Reagan decided to drown the Soviets in cheap oil and allowed the U.S. oil patch to be the innocent bystander caught in the cross fire. He won the cold war but today, outside of China, the oil patch has 1/3 of the workers it had when oil was $8.00 per barrel. Now the U.S. Congress, under Democratic control, wants to run those workers off or shut them down.
The real question is not where are the Chinese going for oil, it should be, after the Democrats get done crippling the US oil patch, how much of their oil are the Chinese going to share with their “good” buddies in the Alabama or the other 49 new Chinese economic provinces. Increasing taxes on oil production does not encourage more oil production; neither will it decrease the price at the pump.
Oh! I forgot we are going to replace $3.50/$4.00 gas with $5.00 ethanol and biodiesel. That’ll make getting to work next to free. It also means Ethiopians starve and the Brazil clear cuts the entire Amazon, but some sacrifices have to be made to shut down the evil oil empire of ExxonMobil and pals. It is kind of sad that killing ExxonMobil and company will put more carbon in the air and decrease oxygen production, but again its those sacrifices.
Once the US oil patch is out of business, they will no longer inconvenience the Chinese on China’s road to economic world domination. Refusing to fight does not keep the other guy from winning.
I am not opposed to alternate energy. When someone develops a technology that works at the best price point it will happen. But there has never been a government smart enough to pick a winning technology. Governmental meddling favor of any given technology only causes delay. But then, if you are not that Ethiopian who does not get to eat for the next year, or the Brazilian Macaw whose home forest was burned to raise more soybeans, so an American Hummer can hit the road today on ecologically benign? ethanol or biodiesel, who cares?
The important thing is to put ExxonMobil and buds out of business.