China in October will become the world’s largest importer of crude oil, surpassing the U.S. for the first time as the Asian giant’s rising consumer class of drivers grows increasingly thirsty for fuel, the U.S. Energy Information Administration reported.
China already is the largest importer of oil from the troubled Middle East, taking away a distinction that plagued the U.S. since the 1970s. Its ascendance as the world’s largest importer — even as U.S. dependence on Middle Eastern oil declines to negligible levels — could transform the geopolitics of the region and the world as the focus of global defense efforts for decades has been keeping open the vital oil transport lines leading from the Persian Gulf, analysts say.
China’s emergence as the world’s biggest oil importer has been building for years, but grew particularly rapidly this decade with the burgeoning of car sales there, which surged to over 19 million last year. China, with 1.3 billion consumers, since 2009 has been the world’s largest market for autos.
That is causing China’s consumption of oil to surge by 13 percent to 11 million barrels a day between 2011 and 2014, the energy agency said. China’s manufacturing industries also are heavy users of oil.
While China’s dependence on foreign oil is growing rapidly, U.S. dependence has been dwindling rapidly. Imports started shrinking dramatically in the U.S. last year as production of oil from shale deposits in North Dakota and Texas kicked into high gear. The U.S. is exporting some of its surplus crude oil in the form of gasoline and other refined products to nations in Latin America and elsewhere.
The surge in U.S. oil production came as more fuel-efficient cars mandated by the government and a declining trend in driving habits caused a drop in U.S. oil consumption to 18.7 million barrels a day recently from a peak of 20.8 million in 2005, the agency said. The combination of higher production and lower consumption has led to reduced imports.
The turnaround in oil imports and consumption, in turn, is helping to shrink the U.S. trade deficit and give U.S. industries a competitive edge as they tap into relatively cheap oil and natural gas pouring out of shale deposits in the Midwest.
While China has vast shale deposits, too, and is eager to tap those to satisfy some of its growing demand for oil and gas, experts say the Asian nation is years away from being able to exploit such unconventional oil sources as it lags the U.S. in technical expertise.
“The last time the United States saw a similar surge in crude oil production was in the late 1970s and early 1980s when Alaskan crude oil production was on the upswing,” said Gary Thayer, analyst with Wells Fargo.
“It helped the U.S. trade deficit to narrow and the value of the U.S. dollar increased in the early 1980s after a decade of weakness,” all of which led to a stronger economy and lower inflation, he said. “Many of the same conditions exist again today.”
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