Secretariat
05-29-2004, 10:47 AM
2003 November 06 Thursday
China Energy Consumption Growth Complicates Anti-Terrorist Efforts
China's energy consumption is growing rapidly and Chinese economic growth can be expected to raise total world demand and, therefore, world prices for oil for many years to come. This is bad news for US attempts to defend itself against Islamic terrorism and the spread of fundamentalist Islam.
Those who are skeptical about the statistics on the rate of growth of China's economy need look no further than rising Chinese energy consumption figures for a good hard measure of economic activity.
From 1989 to 1996 the installed capacity and electricity generation rose by 9.3 and 9.2 percent respectively. By the end of 2001, the installed capacity had risen from 57.12 million KWh in 1978 to 338.61 million KWh (including 2.1 million KWh nuclear power), and the electricity generation grow from 1978's 256.6 billion KWh to 1483.9 billion KWh (including 17.5 billion KWh nuclear power). Now both China's installed capacity and electricity generation have leapt to world second place.
One big mistake the Bush Administration is making in the battle against Islamic terrorists is that it has no real long term strategy that will have only long term pay-offs. The Islamic terrorist threat will not end in the next 5 or 10 years regardless of what strategies are pursued. A big advantage could be gained by the development of energy technologies to reduce the value of oil reserves in the Middle East and reduce the amount of money flowing to the Middle East. Energy technologies that would, once developed, be cheaper to use than current world market prices for oil would displace oil in uses all around the world and, as a consequence, lower world oil prices and lower the amount of money flowing to Saudi Arabia and other Persian Gulf states. This would reduce the amount of money available to spread Wahhabi Islam, to operate madrassah schools, and generally to cause threats to us.
Nobel Prize winner Richard Smalley believes the United States ought to be spending $5 billion per year to develop technologies that will obsolesce fossil fuels. Smalley believes our dependence on fossil fuels is a solvable problem. Put that $5 billion dollar amount in perspective. Congress has voted to spend $87.5 billion in Iraq and Afghanistan. We will probably spend even more than that in Iraq and Afghanistan in future years. Consider an even larger context. Douglas Holtz-Eakin, director of the Congressional Budget Office, provides a picture of expected future defense spending.
He said the defense budget, which stood at about $380 billion this year, excluding the emergency spending, could average $472 billion a year through 2009 and $533 billion a year between 2010 and 2022.
The US economy is over $10 trillion per year. The total cost of the 9/11 attack is in the ballpark of about $100 billion. Another larger attack could cost far more. Isn't it time we started to take some large steps toward developing technologies that will reduce world demand for oil as a way to reduce the amount of money available to the Islamists to make trouble for the rest of the world?
China replaced Japan as second largest oil consumer in 2002.
Brent oil prices averaged $ 25.19 a barrel in 2002, according to BP, which was up only slightly from 2001's average price of $ 24.77 a barrel. This price, however, was "well above" the post-1986 yearly average of $ 19.40 a barrel, BP reported. "Prices during 2002 ranged from a low of around $ 18 a barrel in mid-January to peak just before the end of the year at $ 32(/barrel)," the report said. Global oil demand, meanwhile, was "broadly flat," BP said, increasing 290,000 bpd to 75.7 mm bpd from 75.5 mm bpd. "All of the increase is attributable to China where oil consumption increased 5.8 % or 332,000 bpd," BP said.
...
China, meanwhile, accounted for 68.5 % of the increase in global primary energy consumption in 2002 and has become a "major energy consumer and importer," according to BP's report. "Consumption of coal, which accounts for 66 % of Chinese energy use, grew a massive 27.9 %. Oil consumption increased 5.8 %, or 332,000 bpd, accounting for all of the world's oil consumption growth in 2002," BP reported, adding, "China replaced Japan as the world's second largest oil consumer."
...
"Natural gas is the world's preferred non-transport fuel. Outside the former Soviet Union, gas consumption has grown 3.4 %/year over the past decade and its share of total energy consumption is now roughly equal to coal at 24 %," the report said.
How much money is spent buying oil? To use round numbers, 75 million barrels of oil per day times $25 per barrel is $1.875 billion dollars per day of money flowing to buy oil each day. For a whole year that is about $684 billion dollars spent buying oil. With the Middle East possessing about two thirds of the world's oil reserves and with demand and probably prices rising it seems reasonable to expect the amount of money flowing to the fundamentalist Islamic states of the Persian Gulf to rise substantially in coming years.
Keep in mind that in 2002 the economies of the United States and Europe were very weak. So the flat world oil consumption for 2002 is not representative of the long term trend which continues to be toward increasing world oil consumption.
The continued growth of the Chinese economic juggernaut promises to greatly increase the demand for oil. It is going to happen. The effect will be to increase the challenge we face from the Islamists. We need a response that will solve the problem. The Chinese dependence on oil also bodes poorly in another way with regard to our problems with Muslims: The Chinese, mindful of their own growing dependence on Middle Eastern oil, are going to become increasingly inclined to give the Arab oil states anything they want. Weapons? Weapons technology? The Chinese are going to be inclined to say yes to any requests coming from the Persian Gulf states. Our ability to convince the Chinese to refrain from proliferating dangerous technologies will consequently decline.
For a very detailed breakdown of world energy consumption and energy reserves see the BP Statistical Review of World Energy for 2002. (PDF format)
World consumption of primary energy increased by 2.6% in 2002, well ahead of the 10-year growth trend of 1.4% per annum. Reported growth in energy demand of almost 20% in China was behind much of this relative strength: energy consumption in the world, excluding China, grew by less than 1% during the year, reflecting a second year of below-trend economic growth.
Coal was the fastest-growing fuel in 2002 on the back of a huge 28% reported rise in Chinese consumption. World coal consumption increased by almost 7%, well ahead of the 10-year annual trend rate of less than 1%. Natural gas consumption recovered strongly to grow by 2.8% in 2002, while oil consumption was broadly flat for the second year running. Nuclear and hydroelectricity grew by 1.5% and 1.3% respectively.
World coal consumption increased by 6.9% in 2002. However, this was almost entirely a Chinese phenomenon: reported consumption in China rose by an extraordinary 27.9%. Excluding China, world coal consumption grew by just 0.6%, with strong growth of 3.7% in Asia (excluding China), and modest growth in North America of 1.5%, offset by declines of 1% in Europe and 7.8% in the FSU.
The Middle East contains about twice as much oil as the rest of the world put together. Rapid Chinese economic growth will ensure that the amount of money flowing to the Middle East to buy oil will increase substantially in future years.
US oil reserves represent less than 4 years of current US oil consumption.
According to the EIA, the United States has 21 billion barrels of proved oil reserves as of January 1, 2000. The U.S. uses about 6.6 billion barrels per year. That is only enough oil to last the U.S. about three and a half years without importing oil from other countries. 84% of the reserves are concentrated in four states. Texas has 25%, both onshore, and offshore. Alaska has 24%, California has 21%, and Louisiana has 14% onshore, and offshore. Since 1990, U.S. oil reserves have dropped about 20%. New oil discoveries made in 1999 were made almost entirely in the Gulf of Mexico, and Alaska. (321 million barrels). All other discoveries were extensions of existing oil fields, or new reservoirs discovered in old fields. (404 million barrels).
US oil reserves are not a solution for US domestic needs. Even if they were the rest of the world would still be sending lots of cash to the Middle East. The existing level and expected rise in world demand for oil is a national security problem for the United States. Energy policy should be treated as an element of national security policy and spending on energy research should be considered as just as important as spending on weapons development, troop deployments, or intelligence efforts.
Update: The situation with the world's oil market going forward is going to get even worse for another reason: world oil production will probably peak within 10 years. Natural gas production will most likely peak a few years later. Even if there are a lot of reserves remaining the problem is that there is a limit to how fast old fields can produce. The oil doesn't move fast enough underground that it can be pumped up rapidly even when a lot of oil is remaining. One big asset the United States has is a lot of great scientific minds in great research universities. It is time to play to our strengths and provide America's university researchers billions of dollars per year in basic research money to explore all manner of questions whose investigation can yield useful discoveries for developing new energy technologies. Do the basic research in the unversities and then let venture capitalists and corporations pay for the commercialization of the discoveries.
China Energy Consumption Growth Complicates Anti-Terrorist Efforts
China's energy consumption is growing rapidly and Chinese economic growth can be expected to raise total world demand and, therefore, world prices for oil for many years to come. This is bad news for US attempts to defend itself against Islamic terrorism and the spread of fundamentalist Islam.
Those who are skeptical about the statistics on the rate of growth of China's economy need look no further than rising Chinese energy consumption figures for a good hard measure of economic activity.
From 1989 to 1996 the installed capacity and electricity generation rose by 9.3 and 9.2 percent respectively. By the end of 2001, the installed capacity had risen from 57.12 million KWh in 1978 to 338.61 million KWh (including 2.1 million KWh nuclear power), and the electricity generation grow from 1978's 256.6 billion KWh to 1483.9 billion KWh (including 17.5 billion KWh nuclear power). Now both China's installed capacity and electricity generation have leapt to world second place.
One big mistake the Bush Administration is making in the battle against Islamic terrorists is that it has no real long term strategy that will have only long term pay-offs. The Islamic terrorist threat will not end in the next 5 or 10 years regardless of what strategies are pursued. A big advantage could be gained by the development of energy technologies to reduce the value of oil reserves in the Middle East and reduce the amount of money flowing to the Middle East. Energy technologies that would, once developed, be cheaper to use than current world market prices for oil would displace oil in uses all around the world and, as a consequence, lower world oil prices and lower the amount of money flowing to Saudi Arabia and other Persian Gulf states. This would reduce the amount of money available to spread Wahhabi Islam, to operate madrassah schools, and generally to cause threats to us.
Nobel Prize winner Richard Smalley believes the United States ought to be spending $5 billion per year to develop technologies that will obsolesce fossil fuels. Smalley believes our dependence on fossil fuels is a solvable problem. Put that $5 billion dollar amount in perspective. Congress has voted to spend $87.5 billion in Iraq and Afghanistan. We will probably spend even more than that in Iraq and Afghanistan in future years. Consider an even larger context. Douglas Holtz-Eakin, director of the Congressional Budget Office, provides a picture of expected future defense spending.
He said the defense budget, which stood at about $380 billion this year, excluding the emergency spending, could average $472 billion a year through 2009 and $533 billion a year between 2010 and 2022.
The US economy is over $10 trillion per year. The total cost of the 9/11 attack is in the ballpark of about $100 billion. Another larger attack could cost far more. Isn't it time we started to take some large steps toward developing technologies that will reduce world demand for oil as a way to reduce the amount of money available to the Islamists to make trouble for the rest of the world?
China replaced Japan as second largest oil consumer in 2002.
Brent oil prices averaged $ 25.19 a barrel in 2002, according to BP, which was up only slightly from 2001's average price of $ 24.77 a barrel. This price, however, was "well above" the post-1986 yearly average of $ 19.40 a barrel, BP reported. "Prices during 2002 ranged from a low of around $ 18 a barrel in mid-January to peak just before the end of the year at $ 32(/barrel)," the report said. Global oil demand, meanwhile, was "broadly flat," BP said, increasing 290,000 bpd to 75.7 mm bpd from 75.5 mm bpd. "All of the increase is attributable to China where oil consumption increased 5.8 % or 332,000 bpd," BP said.
...
China, meanwhile, accounted for 68.5 % of the increase in global primary energy consumption in 2002 and has become a "major energy consumer and importer," according to BP's report. "Consumption of coal, which accounts for 66 % of Chinese energy use, grew a massive 27.9 %. Oil consumption increased 5.8 %, or 332,000 bpd, accounting for all of the world's oil consumption growth in 2002," BP reported, adding, "China replaced Japan as the world's second largest oil consumer."
...
"Natural gas is the world's preferred non-transport fuel. Outside the former Soviet Union, gas consumption has grown 3.4 %/year over the past decade and its share of total energy consumption is now roughly equal to coal at 24 %," the report said.
How much money is spent buying oil? To use round numbers, 75 million barrels of oil per day times $25 per barrel is $1.875 billion dollars per day of money flowing to buy oil each day. For a whole year that is about $684 billion dollars spent buying oil. With the Middle East possessing about two thirds of the world's oil reserves and with demand and probably prices rising it seems reasonable to expect the amount of money flowing to the fundamentalist Islamic states of the Persian Gulf to rise substantially in coming years.
Keep in mind that in 2002 the economies of the United States and Europe were very weak. So the flat world oil consumption for 2002 is not representative of the long term trend which continues to be toward increasing world oil consumption.
The continued growth of the Chinese economic juggernaut promises to greatly increase the demand for oil. It is going to happen. The effect will be to increase the challenge we face from the Islamists. We need a response that will solve the problem. The Chinese dependence on oil also bodes poorly in another way with regard to our problems with Muslims: The Chinese, mindful of their own growing dependence on Middle Eastern oil, are going to become increasingly inclined to give the Arab oil states anything they want. Weapons? Weapons technology? The Chinese are going to be inclined to say yes to any requests coming from the Persian Gulf states. Our ability to convince the Chinese to refrain from proliferating dangerous technologies will consequently decline.
For a very detailed breakdown of world energy consumption and energy reserves see the BP Statistical Review of World Energy for 2002. (PDF format)
World consumption of primary energy increased by 2.6% in 2002, well ahead of the 10-year growth trend of 1.4% per annum. Reported growth in energy demand of almost 20% in China was behind much of this relative strength: energy consumption in the world, excluding China, grew by less than 1% during the year, reflecting a second year of below-trend economic growth.
Coal was the fastest-growing fuel in 2002 on the back of a huge 28% reported rise in Chinese consumption. World coal consumption increased by almost 7%, well ahead of the 10-year annual trend rate of less than 1%. Natural gas consumption recovered strongly to grow by 2.8% in 2002, while oil consumption was broadly flat for the second year running. Nuclear and hydroelectricity grew by 1.5% and 1.3% respectively.
World coal consumption increased by 6.9% in 2002. However, this was almost entirely a Chinese phenomenon: reported consumption in China rose by an extraordinary 27.9%. Excluding China, world coal consumption grew by just 0.6%, with strong growth of 3.7% in Asia (excluding China), and modest growth in North America of 1.5%, offset by declines of 1% in Europe and 7.8% in the FSU.
The Middle East contains about twice as much oil as the rest of the world put together. Rapid Chinese economic growth will ensure that the amount of money flowing to the Middle East to buy oil will increase substantially in future years.
US oil reserves represent less than 4 years of current US oil consumption.
According to the EIA, the United States has 21 billion barrels of proved oil reserves as of January 1, 2000. The U.S. uses about 6.6 billion barrels per year. That is only enough oil to last the U.S. about three and a half years without importing oil from other countries. 84% of the reserves are concentrated in four states. Texas has 25%, both onshore, and offshore. Alaska has 24%, California has 21%, and Louisiana has 14% onshore, and offshore. Since 1990, U.S. oil reserves have dropped about 20%. New oil discoveries made in 1999 were made almost entirely in the Gulf of Mexico, and Alaska. (321 million barrels). All other discoveries were extensions of existing oil fields, or new reservoirs discovered in old fields. (404 million barrels).
US oil reserves are not a solution for US domestic needs. Even if they were the rest of the world would still be sending lots of cash to the Middle East. The existing level and expected rise in world demand for oil is a national security problem for the United States. Energy policy should be treated as an element of national security policy and spending on energy research should be considered as just as important as spending on weapons development, troop deployments, or intelligence efforts.
Update: The situation with the world's oil market going forward is going to get even worse for another reason: world oil production will probably peak within 10 years. Natural gas production will most likely peak a few years later. Even if there are a lot of reserves remaining the problem is that there is a limit to how fast old fields can produce. The oil doesn't move fast enough underground that it can be pumped up rapidly even when a lot of oil is remaining. One big asset the United States has is a lot of great scientific minds in great research universities. It is time to play to our strengths and provide America's university researchers billions of dollars per year in basic research money to explore all manner of questions whose investigation can yield useful discoveries for developing new energy technologies. Do the basic research in the unversities and then let venture capitalists and corporations pay for the commercialization of the discoveries.