"The oil that troubles US-China waters"

By Travis Tanner
www.atimes.com

Early this month, crude oil futures prices peaked at a 21-year high, reaching US$42.45 a barrel. In conjunction with terrorist risk premiums, China's surging demand for oil is a major driver behind the soaring prices. In fact, since the beginning of 2000, China has accounted for 40% of the growth in world oil demand.

Oil is an essential ingredient in China's successful formula for economic growth. It is critical for driving industrial activity, generating power, constructing infrastructure projects and fueling the rapidly growing number of automobiles on China's roads. Today, imports comprise one-third of China's total oil consumption, growing 31% last year, and by 2020 some estimates put China's dependency on foreign oil as high as 70%.

Oil consumption in the United States, the world's largest consumer of petroleum, is expected to grow nearly 50% over the next 20 years. Beijing, also on the fast track to oil dependency, is on a search to secure energy sources across the globe. This quest, in addition to China's heavy reliance on Middle Eastern oil, suggests a potential rivalry between the US and China over access to oil-rich regions. Many analysts argue that the trajectories of the world's two most voracious oil consumers will inevitably lead to a clash over the scarce resource.
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