It looks as though this year China may pass the US as the world's largest oil importer.
It is already the largest car market and car producer, building 16 million vehicles last year against the US's 14.5 million. There are predictions that it will be a 30 million-a-year market by 2020. But its 80 million stock of vehicles is still well below that of the US or Europe, with 250 million and 260 million respectively.
Of course cars are not the only user of oil, but China, which has relatively low oil production, tends not to use oil for heating (or electricity generation) preferring instead to use its plentiful coal. So the growth of road transport is the principal driver for increased oil imports. The US, by contrast, is about to ramp up shale oil (and gas) production, thereby reducing its need for imported energy.
At one level, this is just another tipping point, one of those string of statistics that mark the gradual overhauling of the US economy by China – with the Goldman Sachs model predicting 2027 as the year when it finally does so.
But the increase in oil imports by China is important for something else: its geopolitical impact.
China is already the largest importer of oil from the Middle East and realistically that dependence will grow. So it will obviously have an even greater incentive to have a stable Middle East, but also an even greater incentive to diversify supplies.
However, China has little experience in finding oil or extracting under difficult circumstances, so expect it to scoop up western expertise in both these areas.
Demand for skills in the oil business will continue to boom.Reuse content