Here’s a case where we don’t mind seeing the US lose: China is now the world’s top oil importer. The US held the title for awhile, but increased energy efficiencies and (more importantly) the recent shale revolution have cut down America’s energy deficit. Meanwhile, demand for energy in China continues to grow (oil demand is up 40 percent from five years ago), and with its own attempts to extract shale oil and gas floundering Beijing is having to look abroad to meet its needs. The FT reports:
The US government’s Energy Information Administration said on Tuesday that in September the gap between oil consumption and domestic production averaged 6.24m barrels per day in the US, and 6.3m b/d in China.
The US had been the world’s largest importer since moving ahead of Japan in the 1970s, as a result of the decline in its production that began at the start of that decade.
In the past five years, however, that decline has gone into reverse, thanks to advances in the techniques of hydraulic fracturing and horizontal drilling that have unlocked previously inaccessible reserves in shale rocks.
China’s leadership isn’t blind to the growing costs of a rising energy deficit—both to its economy and to its security. The state-run oil company CNOOC is working to ramp up domestic oil production, especially in deepwater offshore plays in the South China Sea. The WSJ notes that these new targets aren’t in contested areas, but there are plenty of hydrocarbons in murkier waters. Asia’s Game of Thrones in the East and South China Seas isn’t just about nationalistic posturing over small rocks pocking out of the water (though it certainly is that, too).
Meanwhile, America’s energy future looks brighter than ever. US fuel exports are at an all-time high, and two dozen liquified natural gas export facilities are awaiting a federal go-ahead to begin offloading America’s glut of shale gas on the global market. We’re now the world’s top producer of oil and gas. And it’s (almost) all thanks to fracking.
[Oil barrel image courtesy of Shutterstock]