The China Gas Threat an National Security

[Secretariat]

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.

[Secretariat]

2004 April 26 Monday

China Making Energy Deals The World Over

China has surpassed Japan as the second largest importer of oil and it will most likely surpass the United States within 10 or 20 years. An article in Newsweek reports many examples of Chinese efforts to build better diplomatic relations and to do oil development deals in many countries around the work.

Now Chinese diplomats are spending more time in Riyadh, Saudi oil officials are learning Mandarin Chinese and the bonds between the two countries are stronger than ever. Little wonder that Chinese officials afforded VIP treatment to Saudi Oil Minister Ali al-Naimi when he visited in early April. And it may have paid off: the minister boosted hopes for a long-delayed $3 billion contract to enlarge an existing refinery and build an ethylene project in the Chinese province of Fujian. If it goes forward, the deal would raise Saudi energy exports by as much as 50 percent. Sinopec—the Chinese refining conglomerate with the largest stake in the project's development—was already awarded a gas-exploration license for nearly 40,000 square kilometers in Saudi Arabia's Rub al-Khali basin earlier this year.
...
Hu Jintao and his entourage of globe-trotting oil officials have been loitering in Libya and glad-handing in Gabon. In January Hu embarked on a tour of energy-exporting African states, inking a 30-year deal to buy Gabonese crude and laying the groundwork for future deals in Chad and Niger.

In the face of all this the Bush Administration intends to CUT rather than increase energy research spending. Energy policy is national security policy. The Bush Administration is lacking in a serious strategy for a major national security issue. The Bushies are taking a very short-run view of US energy needs and are not considering the longer term problems that result from the money that flows to the Middle East to buy oil. The Bushies seem to be oblivious to the fact that America's only serious rival for global power is in the process of gaining more important and influence in the eyes of Middle Eastern oil producers and that this rival will likely eventually displace the US as largest customer of the Middle Eastern oil producers.

[Latin Qtr]

Secretariat why do you reprint these LONG articles? Don't you
think most of us read the papers?

[Tom]

1. What is your source?
2. Are you not able to read those tings, formulate a conclusion, and then present that instead of wasting paste? Don't you know over-use of paste is causing global-cooling?
3. Obviously, there is no shortage of gas in Off Topics

[hcap]

We are running out of black gold. Only a matter of time. Like ostriches, heads buried in the sand, we are squabling over the last shreds of a tasty meal. The Chinese, and other asian markets only add to the geopolitical rivalry for positioning that has occured throughout the 20th century. Difference this time is that the race is in the last 1/2 furlong.

Da chart


site: http://www.oilcrisis.com/campbell/update2002.htm

Up until now the conventional wisdom has been "big deal, thru ubermench technology we triumph" Well no more. Time to put those windmills in central park.

Now the question to ask is why does the following article appear in Janes-a military and military-industrial magazine?

Other than tanks and aircraft needing black gold, so does our non-comprimising lifestyle.
We have been globably strategically inserting ourselves in regional conflicts, where amazingly by coincidence, most of the time underground, is you guesed it, DUH, oil.

World oil crisis looms
http://www.janes.com/business/news/f...0421_1_n.shtml

21 April 2004 - The oil industry has been gripped by scandal since Royal Dutch/Shell twice this year downgraded its proven oil reserves by 20 per cent, or nearly 4bn barrels. Shell may not be alone.

Other companies and even governments have hyped up the estimates of how much oil they have, which is a vital factor in measuring their economic health. If exaggeration proves to be widespread, it would have an immense impact on the Middle East, whose economic weight is almost totally dependent on oil and natural gas.

Geologists and analysts have been saying for some time that estimates of global oil reserves may be dangerously exaggerated. If you take oil prices currently at around US$37 a barrel, the highest for nearly 15 years, US petrol prices at record levels and you add terrorist attacks and diminishing supplies, you have a recipe for inflation and economic slowdown. The question of reserves becomes a much more important factor.

Earlier this month, The New York Times reported that internal documents and other data indicated that Shell had over estimated its proven oil reserves in Oman by as much as 40 per cent. But that seems to have been done because everyone hoped that the latest drilling techniques would reach more deposits than in the past and merit upgrading the estimates of reserves.

The Oman estimates were based on assessments made in May 2000 by a senior Shell executive who was subsequently fired. He was among several executives who were said to have known about the unrealistic estimates of reserves and to have done nothing about it.

If the exaggeration is confirmed, the estimate of recoverable oil will have to be lowered. That is bad news for Oman, which claims reserves of 5.4bn barrels and is heavily dependent on oil and gas exports but it is also bad news for the world as a whole.

As the world's natural resources shrink and global warming changes the environment, competition for unimpeded access to them has intensified and will continue to do so. About four-fifths of the world's known oil reserves lie in politically unstable or contested regions.

351 of 810 words
[End of Jane's non-subscriber extract.]

I would expect princey bandhar to come thru to help is pal dubya, but the long term don't look good, the short term looks real good if you are an oil executive.

[hcap]

Tom

3. Obviously, there is no shortage of gas in Off Topics

No question. 100% correcto. But consider the following

Tom
Veteran Posts: 6224

Secretariat
Veteran:Posts: 890

hcap
Veteran:Posts: 410

So even if my and Secs word count together is 4xs yours, you still got us beat:

[bill]

can you reformat a post to fit screen

(hcaps next to last)

[Tom]

Hcap.....I, however, am high-octane.

[hcap]

Tom around 2010 looks like you will be switching to high octane wind.

Oh wait a minute does that mean all of us will be "windbags" instead of "gasbags"?



bill, are you at 800x600 screen resolution?
I'm at 1024x768.
Can you see everthing?

[hcap]

Consumers Union

http://www.business-journal.com/Reco...oupsReport.asp

"The report, entitled “Fueling Profits: Industry Consolidation, Excess Profits & Federal Neglect, Domestic Causes of Recent Gasoline and Natural Gas Price Shocks,” shows while OPEC has taken a bite out of consumers’ pocketbooks, domestic companies have taken about three quarters of the price increases since January 2000. The report attributes about half of the price increases to changes in domestic pricing behavior that was created by a wave of mergers that swept through the industry in the past decade.

“The industry became concentrated in the hands of a few vertically integrated companies and allowed domestic oil companies shut down refineries, reduce stocks, and exploit markets when they become tight,” said Mark Cooper, director of research for the Consumer Federation of America. “Since these price increases were about padding the corporate bottom line, not about responding to increased costs, petroleum industry profits have risen to record highs over the period.”

“Based on results from the first quarter of this year, domestic petroleum industry profits are headed for another record with refining and marketing profits up about 50 percent compared to the first quarter of 2003,” Cooper added."


As I said great time to be an oil exec
At least until dashitahitafan.

[PaceAdvantage]

So I guess now everyone understands why oil is at an all time high (with a terrorist / war premium thrown in to boot!)

[Buckeye]

yeah, but just wait, it will be at an all time high in adjusted dollars, and then, S.U.V.s' will not survive.

[JustRalph]

Originally posted by Buckeye
yeah, but just wait, it will be at an all time high in adjusted dollars, and then, S.U.V.s' will not survive.

Damn Buckeye........you really have a hard-on for SUV's huh?

Can you explain this? Is it all about the environmentalist slant? or did you get whacked by one somewhere?

[hcap]

Pa

So I guess now everyone understands why oil is at an all time high (with a terrorist / war premium thrown in to boot!)

Not saying these do not add to the problem. Just that the oil industry has done rather nicely at our expense. Of course you realize how oil soaked this administration is? Convenient arrangement. Maybe if Cheneys energy conferences were open to examination, we could all feel we were fairly treated, and there was no undue influence.

[Suff]

Oil and natural gas.

You might have seen BP and the other big oil companies attempting to counteract the negative press by running TV ads. Have you seen them? Where they ask Joe Punch clock what he or she would do about the oil situation? The narrator goes on to say that "Big Oil" has developed liquid natural gas wells totalling X/X amount. As if thats an alternative.

FYI.

Oil... Crude oil. Comes from PLant Fossils. (not dinasours). Over time, with pressure and heat the fossils become oil. It requires 140 to 250 degree farenhiet tempatures to become oil. At 350 Degrees faranhiet it becomes natural gas. Same hole, same spot, same country... Nothing different except it burns cleaner.

Between 250 and 350 it is whats known as "associatted gas"... a mix of the products. Virtually useless with out very sophisticated refining process's. Iraq has the largest "associatted gas" reserves in the world...