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Sunday, March 20, 2005
China’s Future: Oil
China delenda est. I feel as though I’m going to be thinking about (worrying about) China for a very long time, so I might as well get used to it. Frankly, I feel more than a little like Cato the Elder. I expect that I’m going to be talking about China for many, many years. Decades, probably and that maybe, just maybe, I’ll end up getting as lucky as Cato in the end. Where to begin? It’s impossible not to begin with the issue of China’s increasing economic power. While it’s difficult to figure out exact statistics as to the size of the Chinese economy (estimates vary wildly) their import figures speak for themselves. China is sucking in raw materials. One can only presume that they’re doing something with them. Oil is, of course, just the beginning. But it’s also the most critical part. China needs massive quantities of oil. Within a few decades, it’ll need more oil than the United States. Odds are, based on what we’ve seen to date, that it’ll need more oil than America sooner than everyone thinks. All of those cars that all of those newly middle-class Chinese are going to drive are going to need fuel. The real reason why oil prices are soaring is exactly this: China’s unending thirst for oil. China’s demand for oil is increasingly exponentially. So, what’s to be done? Ultimately, we’re going to have to have an oil war with the Chinese. It’s going to be necessary to work out deals with every nation we can find to secure their oil and deny it to China. But, more than that, we need to consider several things. First, it’s necessary to maintain oil security. Oil is vital for warfare. Not only should the United States continue to work to explore increased domestic sources of oil, but it’s also important to ensure that supplies are available for instant access. That means having active plans to seize foreign oil fields which have come under Chinese influence, such as those in Venezuela and Canada, if they continue to supply China during a military crisis. That may sound extreme but, frankly, I don’t really care. If the United States needs oil in a crisis, it’ll get it. Period. It’d be best to plan for it. On the same lines, it would probably be worthwhile to build up the Strategic Petroleum Reserve as time allows. The more oil on hand, the less vulnerable the United States is (over the short-term) to a massive spike in world prices. At the same time, we’ve also got to consider the need for alternative energy sources. I shudder at using the phrase. For me “alternative energy” draws to mind images of an unwashed environmentalist ranting about “Wind Power” and “Tidal Energy.” “Wind Power” might be good for some small town, but it’s not for a great nation like America. What’s required is a national effort to create future technology, particularly in the area of fusion power and the like. Advanced technology is within the reach of the United States, and it offers a real chance to move ahead. Now, there’s several ways to do this. Some would have direct subsidies. I propose a more market-based approach. The US Government ought to adapt the X-Prize approach to research, offering cash prizes in exchange for small verifiable steps in research. At the same time, China’s own reliance upon imported oil must be considered one of its greatest weaknesses. The one area where China’s military power is absolutely and unquestionably incapable of competition with the United States is at sea. The United States greatest advantage, therefore, is that is has a much greater capacity to cut off China’s oil imports by sea. The United States Navy could destroy China’s Navy and cut off any ability to ship oil into China by sea. Energy is the fundamental building block of a modern economy. Without it, you can’t do much. With it, you have the chance for success. It’s absolutely essential that we prepare for conformation with China in this field.
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