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Saudi Arabia now ships more oil to China than to the US

Wednesday, July 28th, 2010


Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.

By M. Ray Perryman

THE ECONOMIST

 Recently, the International Energy Agency in Paris announced that China has surpassed the US’ long held position as the world’s largest consumer of energy.  Last year, China consumed the equivalent of more than 2.25 billion tons of oil, while the US consumed approximately 2.17 billion tons (these ‘equivalent’ measures include all types of energy used).  While there is some debate as to the accuracy of these numbers, they are nonetheless indicative of an underlying trend that is very clear. 

A decade ago, China’s energy needs were only about half that of the US, although its population is several times larger.  Since that time, growth in demand from industrial expansion as well as from that country’s residents has generated double-digit annual growth. 

Earlier predictions suggested that China’s energy consumption might surpass US use within the next five years, but the global recession negatively impacted US demand more significantly than elsewhere and, thus, China has emerged as the globe’s top energy consumer.

The lion’s share of China’s energy (about 70%) is produced by using coal.  The US Energy Information Administration estimates that China will probably double its consumption of coal in the next 20 years, though it is likely that its use may drop as a percentage of total energy consumption. 

To reduce its reliance on coal, China’s focus is now more on the use of non-fossil fuels.  One way is evident as the country is planning to build new nuclear plants which are targeted to provide some 15% of primary energy consumption over the next decade. 

Currently, China accounts for about 2% of the nuclear power produced globally, but plans underway will certainly increase that percentage over the coming years.  There are now 11 nuclear reactors at six plants in China and work on more than two dozen additional ones is being undertaken.

During the next decade, China is also planning to develop wind power that will produce five times the energy of that country’s Three Gorges Dam, which began operation in 2003 and is the largest electrical plant in the world. 

China’s demand for oil has also been increasing significantly over the past several years, up some 28% in 2009.  In fact, Saudi Arabia now ships more oil to China than to the US.

The fact that China now uses more energy than the US is hardly surprising since that country’s population is some billion persons larger.  As the Chinese economy continues to become more industrialized, it is likely that this pattern will intensify. 

Currently, the average Chinese person uses far less energy than the typical American.  In fact, even though China’s energy consumption has doubled over the past 10 years, the US still consumes five times more energy per capita.  Moreover, we continue to be the world’s biggest oil consumer, and the US also is ahead of China in electricity consumption.

The US may never regain the top spot in overall energy consumption and, even if it does, it will likely only be temporary.  That may be a good thing.  With energy consumption worldwide expected to expand some 44% by 2030, the demand for greater efficiency is becoming ever more imperative. 

Thus, by effectively implementing new technology into emerging energy production systems, increasing political support for improving energy efficiency, and strengthening programs that encourage consumers’ adoption of energy saving methods and technology, the US will likely continue to be a leader in the effective use of energy regardless of where it ranks globally in the amount of consumption.  The effective use of these resources is a key to sustainable expansion and long-term prosperity.

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