Every two seconds, somewhere across China a customer takes delivery of a new car — part of a consumer buying blitz that will see China add 21 million new cars, trucks and buses to its fleet total in 2014.Short of a catastrophic economic downturn, a government edict against new car ownership, or draconian traffic congestion charges, a continuation of that growth rate means China will likely have a bigger motor vehicle fleet than the United States by 2020.

Indeed, the combination of a low vehicle penetration rate — only 85 vehicles for every 1,000 people in China, compared with more than 800 per 1,000 in the U.S. — and the consumer aspirations of high-income, urbanized households across China almost guarantees it.

As many as five million of the 260 million-plus vehicles on Chinese roads in 2020 will be plug-in hybrids or battery electric vehicles, while others will use fuel cells. Many of the country’s taxis, trucks and buses will run on compressed natural gas. There will be multiple fuel-saving aids and financial incentives.

Petroleum demand

But overwhelmingly, passenger cars will still run on gasoline and diesel fuel, which is why Chinese demand for petroleum is the key factor in the global energy outlook for 2014 and beyond.

China is already the world’s biggest energy consumer and must import 60% of the crude oil it needs to meet its transport and refinery needs, as well as to fire some of its industries and power plants. Much of the estimated 10.5 to 11 million barrels of oil that China consumes every day comes from Saudi Arabia and other Middle Eastern suppliers, and many of the Middle Eastern crude carriers must pass through the Strait of Malacca “choke point” between Malaysia and Indonesia en route to China.

That logistical vulnerability troubles China. So while its transport sector’s oil demand is growing, China is trying to lessen its reliance on oil for power by putting greater emphasis on coal, nuclear, natural gas and renewable sources such as solar, wind, biomass and hydro power. Already it has the world’s largest installed base of wind power (76 gigawatt at the end of last year), and is the dominant producer of photovoltaic modules for the solar power industry.

Diversified energy supply

At home, China is pushing ahead with the search for and development of more domestic hydrocarbons, including unconventional resources such as shale gas, tight oil and coal-bed methane. At the same time, its focus on a diversified energy supply means it invests in and encourages oil and gas imports via pipelines from Central Asia, Russia and the new pipeline route from the Indian Ocean through Myanmar. Further afield, it is investing in North and South American oil and gas assets, from shale fields in western Canada to heavy crude in Venezuela’s Orinoco Belt.

In the next few years, more liquefied natural gas (LNG) from Australia, Papua New Guinea, North America and Africa will enter the Chinese energy equation, along with Russian LNG from the remote Yamal Peninsula in northwest Siberia via the Northern Sea Route, the shorter but more hazardous shipping route that runs through Arctic waters to the Bering Strait and thence to the Pacific Ocean.

All of this means that China, and not the U.S., will be a key target market for the world’s major oil exporters in future. China’s oil import needs are growing, just as North America’s are declining on the back of its shale gas bonanza over the past five years and the more recent emphasis on oil production in places such as North Dakota’s Bakken field.

China already has eclipsed the U.S. as the top net oil importer. According to the U.S. Energy Information Administration (EIA), China’s net oil imports in September were 6.3 million barrels a day, ahead of a net figure of 6.13 million barrels a day for the U.S. It said this trend was likely to continue in 2014.

Overall the U.S. will likely remain the world’s biggest oil user in 2014, with the EIA expecting it to consume the equivalent of 18.7 million barrels a day. China’s figure will be about 11 million barrels a day.

Auto love

But that order could change over the next decade, if China’s love affair with the motor car continues unabated. Global passenger car sales next year will reach almost 75 million, according to a forecast earlier this month by the German Automotive Industry Association (VDA).

When trucks and buses are included, the total will likely reach 85 million. Between 23 and 24 million of those sales will occur in China, while the U.S. will account for about 16 million vehicles in 2014 and peak at 17 million in 2017. In contrast, Chinese demand may well grow to between 25 and 30 million vehicles a year later this decade.

Even though major Chinese cities such as Beijing, Shanghai and Guangzhou have begun to introduce vehicle-use restrictions to combat traffic congestion and pollution, analysts expect the consumer action will simply move to other less-crowded venues.

Already, leading global carmakers like VW, GM, Hyundai, Toyota and their Chinese joint venture partners are targeting second, third and fourth-tier cities where the car ownership growth opportunities may be greatest.

In a study last year, management firm McKinsey said that apart from government restrictions and a growing used-car market, other factors that could impact on China’s new car sales over the next decade include industry consolidation, improved public transport options and the growth of car-sharing and car rental businesses. At the same time, McKinsey said more Chinese buyers were looking for bigger, better and more expensive vehicles such as sports utility vehicles.

That will ensure China becomes the biggest player in the global energy-for-transport sector. It will also be the world’s biggest user of electric vehicles and a potential pioneer of fuel cells.

In contrast to the Chinese experience, car and light truck fuel use is declining sharply in the U.S. A combination of fuel efficiency and changes to driving behavior means there will likely be a 25% drop in light-duty vehicle energy consumption between now and 2040, the EIA said in its 2014 annual energy outlook released on December 16.

17 Comments on "China’s auto affair drives oil demand"

Arthur on Sun, 29th Dec 2013 12:44 pm 



Forget about romanticized western sixties hippy visions of the ‘wisdom of the east’, a la Alan Watts:

http://en.wikipedia.org/wiki/Alan_Watts

I believed that crap when my hair was much longer than it is today.

China: 1300 million me-too guys. And don’t get me started about India and Africa. All wisdom, two ounce to be precise, will come from the West:

en . wikipedia . org/wiki/Club_of_rome

mike on Sun, 29th Dec 2013 3:10 pm 



Fully agree, Arthur. The oriental/Asian intellectual tradition could never be the source of human advancement. Any salvation from the impending apocollapse will come from Euro/American search for truth. China, Japan, India are mere imitators of the West, in technology, political science, economics, ecology etc. You know, you actually talk sense when you get off your anti-semitic-Anglo-America-destroyed-the-thousand-year reich-fortreess-against-the-Bolsheviks soapbox, Arthur.

DC on Sun, 29th Dec 2013 3:31 pm 



CNN LOL!

In contrast to the Chinese experience, car and light truck fuel use is declining sharply in the U.S. A combination of fuel efficiency and changes to driving behavior means there will likely be a 25% drop in light-duty vehicle energy consumption between now and 2040, the EIA said in its 2014 annual energy outlook released on December 16.

Those ‘changes to driving behavior’ are also known as UN-employment. But the amerikans, long masters of deception keep pushing the ‘efficiency-as-root-cause’ trope now that the numbers are starting to come in. Got to spin this the right way after all. If current trends continue, there could well be 25% less driving by 2040, or 50%, or 75% even. But that will be because oil is too scarce\expensive(take your pick) to allow people to casually idling their days away at a starbucks drive-though.Salvaging metal and rubber from all those parked North American cars could well be a growth industry by 2040. So long as you dont mind pushing it all in a hand-cart.

I agree with Arthur, China has chosen the worst of all possible worlds. Thing is though, China does seem to have some creeping awareness of this, but once the auto-oil juggernaut gets rolling, as it where, it takes on a life of its own and is nearly impossible to roll back, at least voluntarily. Look at ‘us’. The only way we were able to mitigate car-pollution was by exporting all the jobs people were forced to drive to here, to well, Asia! Once the jobs were gone, and the temporary and giddy belief that an eco-friendly ‘service’ economy would smoothly take over for the former industrial(but polluting one), would kick into high gear. Right.

So we export all the car-accesable factory jobs to Asia, where they too, built massive highways to enable Chinese to drive to distant factories, empty shopping malls in the middle-ring, and half-empty office towers in the center.

The take away from all this should be clear. The only way China can fix its car problem is, to yes….outsource ITS industrial production and the jobs that go with them, to I dont know, India or any third world latrine will do. Then the Chinese can start to work on a clean and green ‘service’ economy just like we did. If China thinks they can control runaway car pollution by tossing a few ‘hybrids’ or even the token electric out there, well the evidence is right out there on the street. Its not going to work-period. Either get rid of the cars, or suffer the mother of all eco-industrial crashes. Which is where we are all headed anyhow. The message seems to be:

Buckle up and enjoy the ride….

Kenz300 on Sun, 29th Dec 2013 4:13 pm 



Bicycles and mass transit………. that is what is needed.

stevefromvirginia on Sun, 29th Dec 2013 6:16 pm 



The only thing that will save us now is peak oil. Either that or war … little else can destroy the machines and the machine infrastructure so that it cannot continually re-invent itself in more diabolical forms.

Of course, peak oil already has happened, some say 2005 (some ‘others’ say 1998 … ) but the effects are slow to materialize.

The ‘growth’ of the car industry in China is its own solution.

Bob Inget on Sun, 29th Dec 2013 7:46 pm 



http://www.made-in-china.com/products-search/hot-china-products/Light_Truck.html

If you want a light turbo diesel, try importing your own.

Poordogabone on Sun, 29th Dec 2013 10:17 pm 



“only 85 vehicles for every 1,000 people in China, compared with more than 800 per 1,000 in the U.S.”

That’s only 8.5% own cars in china. I wouldn’t be to quick to dismiss the “wisdom of the East” until a little leveling of the plane field.

GregT on Sun, 29th Dec 2013 11:35 pm 



“The oriental/Asian intellectual tradition could never be the source of human advancement. ”

“China, Japan, India are mere imitators of the West, in technology, political science, economics, ecology etc.”

Hmmm, by this logic, China, Japan, and India, are merely FOLLOWING the ‘human advancement’ afforded to the Earth, by the West. Therefore, it is the West that created the ‘impending apocollapse’ to begin with.

“Any salvation from the impending apocollapse will come from Euro/American search for truth.”

The Euro/American so called ‘search for truth’ was a failure, it turned out to be nothing more than a blatant lie. We are about to face the consequences.

Makati1 on Mon, 30th Dec 2013 12:41 am 



Careful GregT, you are tramping on some European toes. And, since I now live in Asia, I am not to be believed as I could not possibly know anything about Western history or current events.

If Asians are so dumb, why are the largest corporations in the Philippines owned by Chinese families? How much of Europe and America will they own before the dollars crashes, taking down the Euro with it. Did you know that China has invested over $600,000,000,000.00 dollars, ‘owning’ resources on EVERY major continent? It’s a big world out there and getting more complicated every day. ^_^

Dave Thompson on Mon, 30th Dec 2013 1:31 am 



Self reenforcing feedback loops are now taking over. The coming temperature changes are here. For now the people will indulge. If my luck holds I will live to see the main event of planetary biosphere collapse. The young people are gonna be very angry.

GregT on Mon, 30th Dec 2013 2:03 am 



Dave,

Sad, but true.

I watched thousands of Robins today, flying north for their spring migration. It wouldn’t have seemed like such a big deal, if it was March, instead of December.

Keith_McClary on Mon, 30th Dec 2013 6:59 am 



Maybe they could have a “one car” OR “one child” policy.

Arthur on Mon, 30th Dec 2013 10:59 am 



Fully agree, Arthur. The oriental/Asian intellectual tradition could never be the source of human advancement. Any salvation from the impending apocollapse will come from Euro/American search for truth. China, Japan, India are mere imitators of the West, in technology, political science, economics, ecology etc. You know, you actually talk sense when you get off your anti-semitic-Anglo-America-destroyed-the-thousand-year reich-fortreess-against-the-Bolsheviks soapbox, Arthur.

Wow, wow, wow… maybe the 5th Anglo-Dutch sea-war can be prevented after all.lol You say you live in the Midlands, so I have to offer my humble apologies to the good people of Appalachia for calling you a ‘Hillbilly’. And that last sentence of yours has of course everything to do with the gigantic hurting of British interests if my views concerning WW1/WW2 were actually true. Well, at least you seem to be loyal to European civilization after all, so that’s a start I guess.

@Poordogabone: you are correct about your observation that US car (and to a somewhat lesser extent European) ownership vastly outnumbers that of China. Any notion of Westerners lecturing Asians not to drive like Westerners do, is indeed hypocritical. What can be noted though is the futility and short-shortsightedness of Chinese effort to try to set up an infrastructure to prepare the Chinese population for mass car ownership, ignoring 40+ years of warnings, originating from the Western experience, that the car is the most wasteful, unsustainable an disastrous invention of Western civilization.

Hmmm, by this logic, China, Japan, and India, are merely FOLLOWING the ‘human advancement’ afforded to the Earth, by the West. Therefore, it is the West that created the ‘impending apocollapse’ to begin with.

That is true.

The Euro/American so called ‘search for truth’ was a failure, it turned out to be nothing more than a blatant lie. We are about to face the consequences.

It was not a failure, but instead has become a victim of it’s own gigantic success. But it are mainly Westerners like you who understand that the old ways will not work in the future.

Careful GregT, you are tramping on some European toes. And, since I now live in Asia, I am not to be believed as I could not possibly know anything about Western history or current events.
If Asians are so dumb…

Hmmm, 2013-70 = 1943. Euro-American colonialist meets local girl in Philippines. In 1942 Japanese invade and American and wife flee to the US, where baby is born. Baby grows up in a Euro-American world and grows sick and slowly grows tired of America and decides to go ‘home’ at advanced age. Something like that. Would perfectly explain intimate insider knowledge of Euro-America, deep sympathies for Asia, absence of any form of PC characteristic for most Euro-Americans (9/11-truth, confirmation of knowledge about ethnic composition upper layers US power structure, openness for WW1/WW2 revisionism, like Pearl Harbor). Just an hypothesis and for the rest none of my business.

Makati1 on Mon, 30th Dec 2013 11:46 am 



Hmmm … said person you describe is good fiction. I’m pure American, never left the country until I was 21 and went to the Bahamas with a travel club. Then about 10 years later went to Puerto Rico with the National Guard for summer camp, at which time I was married to a nice American lady from Pennsylvania whose family background was from a European country. I did not even know an Asian until I was in my 50s. That I ended up in the Philippines has nothing to do with anything you mentioned. Guess again.

Frank Kling on Wed, 1st Jan 2014 12:55 am 



Arthur:

I can’t locate the excellent piece you wrote about the beginnings of WW I. I hope you will read this message and repost so that I may copy your outstanding summation. Thank you.

Frank Kling on Wed, 1st Jan 2014 1:24 am 



Greg- You are so right about the Robbins. I live in far northern Illinois and for the first time at this time a year the Robbins were eating the crab apples.

Monarch butterflies are headed toward functional extinction as habitat loss and GMO crops have decimated their necessary source of Milkweed.

Kenz300 on Thu, 2nd Jan 2014 1:46 am 



Leave part of the yard around the edges of your property natural and provide habitat for wildlife.
It is less to maintain and looks natural. It attracts a lot of wildlife.

It provides food and shelter for wild life and also provides a natural screen and fence blocking the view of the neighbors property.

I still have milkweed that grows in my yard. The butterfly’s love it.