Last month, for the first time, Chinese imports of crude oil surpassed those of the United States. Though China’s appetite for the commodity is expected to slacken some on slower economic growth in the coming months, we’re seeing a preview of the new status quo, as by the end of the year most analysts expect Beijing to take Washington’s place as the world’s top buyer of crude on a consistent basis. And while China’s rise certainly accounts for much of this shift, on the other side it’s fracking that’s remade America’s crude trade balance. The FT reports:
In the US, higher prices and more efficient motor vehicles curbed consumption in the aftermath of the financial crisis, while the surge in shale oil output over the past three years has reduced imports.
Producers are now chafing at government restrictions on US crude exports that date back to the oil shocks of the 1970s. “It makes no sense that other countries can sell their crude into US markets, while US crude is essentially landlocked,” said Doug Suttles, chief executive of the Encana oil and gas company.
America’s dependence on foreign oil has long affected our interests and strategies abroad, and as booming domestic production is able to supplant imports, we’re afforded more foreign policy options. By that same logic, China is tying strings to its plans as it snatches up more and more crude from all over the world.
Beijing is aware of this, which is one reason why it’s tried so hard to replicate U.S. fracking success by exploring its own massive shale reserves. Those shale projects aren’t going as well as was hoped, so for the foreseeable future China is going to have to rely on suppliers abroad to meet its growing demand.