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Page added on August 25, 2013

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Within Four Years, China To Consume More Oil Than U.S.

Consumption

The U.S. is on its way out as the world’s No. 1 oil importer, according to energy market researchers at Woods Mackenzie.  That coveted (or not so coveted) title will belong to none other than China.  As if anyone would be surprised.

According to the report, China will spend $500 billion a year on crude oil imports by 2020.

“The price China pays will far outstrip the peak cost ever incurred by the U.S. of $335 billion annually with U.S. import spend falling to only $160 billion annually by 2020,” Wood Mackenzie said in a press release last week.

This isn’t the greatest news for China, to be honest. It might be supportive of oil futures, but oil is the most costly, volatile fossil fuel around. The government wants to go green. This study suggests that Beijing is way off the color wheel.

Moreover, pressures from international bodies to reduce carbon footprints as climate change has beach fronts eroding in surprising numbers around the world will undoubtedly pressure Beijing to find alternative sources of energy.  As it is, the country is already engaging in skirmishes with Japan in the East China Sea because of oil.

From 2005 to 2020, China’s oil imports will rise from 2.5 million barrels per day to 9.2 million barrels a day. U.S. imports will fall from a peak of 10.1 million to 6.8 million barrels per day within the same period. That roughly represents a 360% increase in China’s crude oil imports and a 32% decline for the U.S. during that period.

The turning point for Chinese crude oil imports to surpass the U.S. will be around 2017, Woods Mackenzie researchers said.

China’s growth in import demand can largely be attributed to its domestic oil demand growth, driven by cars and commercial ground transportation. Dr. Harold York, Principal Oils Markets Analyst of Woods Mackenzie said that although China consumes less oil per capita by international standards, “by 2020 China will be second only to the U.S. for the total fleet of personal auto vehicles in use. From 2005-2020, China will see the number of vehicles rise from 20 million to 160 million.”

That’s more cars on the road in China than there are people in Japan.  And Beijing thought it was polluted now!

China’s refining structure is currently among the most complex in Asia, focused on medium-sour crude. To produce the oil products in demand, China will therefore look towards OPEC because medium-sour crude is a growing share of future OPEC supply. As a result, between the 2005 to 2020 time frame, OPEC’s share of Chinese imports is expected to rise from 52% to 66%. The share of non-OPEC imports declined from 48% to 34% to 2012, and will continue to decline to the end of the decade. Comparatively for the U.S., OPEC crudes will fall to 33% of total imports while Canadian crudes will account for 60% of U.S. imports.

“The high cost to China for crude oil imports is compounded by the fact that China will pay a higher price for the imports relative to the U.S. as the average price is based on a differential to Brent,” said York.

China can have the oil. The less dependent the U.S. is on foreign oil, the better.

“China and the U.S. are heading in opposite directions,” York  noted about global oil trends.

Although the U.S. is the largest oil import market today, China will surpass U.S. demand within four years and will pay more for it. Notably also is a change in traditional suppliers — China will look even more towards the Middle Eastern OPEC suppliers and the U.S. less so.  Better news for the United States, expensive news for China.

Forbes



9 Comments on "Within Four Years, China To Consume More Oil Than U.S."

  1. BillT on Mon, 26th Aug 2013 3:49 am 

    Really? Of course the US will be using less. Fewer people can afford it. And China is exporting more and more to other countries. It is also getting oil from South America and Africa. And it is paying for it in other than petro dollars. You know what that means…

  2. Plantagenet on Mon, 26th Aug 2013 4:24 am 

    China already is the worlds biggest CO2 emitter.

  3. dashster on Mon, 26th Aug 2013 9:51 am 

    That’s good news. Exporting all our manufacturing is paying double dividends.

  4. TIKIMAN on Mon, 26th Aug 2013 12:40 pm 

    Yeah they probably will, however there will be no extra capacity for them to consume that volume of oil.

  5. rollin on Mon, 26th Aug 2013 1:32 pm 

    They have their own fields to develop, if they can get water out there.

  6. bobinget on Mon, 26th Aug 2013 2:34 pm 

    rollin and TIKIMAN make salient points.
    There certainly is no extra capacity worldwide.
    This is why China will be taking almost all available oil for export. Friday it was announced China will be developing Argentina’s shale (tight oil) field along with
    Chevron’s technology expertise.

    As for water, there is some confusion here. Water for fracking need not be drinking or even AG irrigation quality. Recycling by filtration methods will replace
    the millions of gallons of fresh and waste water now being used. GE is building a multi billion dollar fracking research facility in Utah, near The Great Salt Lake, to deal with THIS very difficult problem and desalination in general.

    Oh BTW: TOD
    (IANS) The overall petroleum demand in the US jumped in July to the highest level in three years, the American Petroleum Institute (API) said.
    The total petroleum deliveries, a measure of demand, rose 1.7 percent in July from a year ago to average $18.9 million barrels per day, Xinhua reported.

    “The summer travel season brought greater demand for several fuel types last month than we’ve seen in the recent years,” API chief economist John Felmy said Thursday.

  7. BillT on Tue, 27th Aug 2013 1:07 am 

    Ah yes, GE… who also built the Fukushima reactors on a fault line and along a tsunami prone coastline…lol.

    As for China and oil. Yep! They will have your Walmart dollars to buy up all the oil you can no longer afford.

  8. Harquebus on Tue, 27th Aug 2013 4:39 am 

    The proverbial is already flying across the room and will splatter long before 2020.

  9. GregT on Thu, 29th Aug 2013 2:38 pm 

    Harquebus is correct, start planning accordingly, or be prepared to be covered in the ‘proverbial’.

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