China Assumes Role of World’s Largest Net Importer of Oil
In the history of major economies there are often watershed milestones, points where an economy shifts toward a new dimension. Yesterday, Supply Chain Matters provided commentary related to China’s announced new shift toward major urbanization and a more concerted consumption driven economy.
We should also mention another China milestone reported earlier this week. In December, China overtook the U.S. as the world’s largest net importer of oil. That crown had been held by the U.S. since the 1970’s. The Financial Times reported this milestone as “a generational shift that will shake up the geopolitics of natural resources.”
According to the U.S. Energy Information Administration (EIA), China’s net oil imports rose to 6.12 million barrels per day compared to 5.98 million barrels for the United States. The figures include crude and refined petroleum products such as diesel fuel. The Paris based International Energy Agency (IEA) further forecasts that non-OECD countries will consume more oil next quarter than the developed countries, adding additional pressures to world oil prices. The implications are multi-fold.
As Chinese consumers continue to buy more cars, the import number could grow much larger without mitigation from alternative energy sources. Manufacturing, transportation and distribution operations in the country continue to consume additional, perhaps more expensive energy. The U.S. on the other hand continues to benefit from cheaper sources of natural gas to fuel manufacturing and distribution in the coming years.
The FT reporting notes the implication as Beijing taking a larger role in patrolling the world’s key oil shipping lanes while taking more assertive policy on foreign oil sourcing in countries such as Sudan, Angola and Iraq. Who knows, China may sometime look to the U.S. as an increased provider of oil to fuel its economic growth in the coming years.
“The Times They Are a-Changin”