China and World Energy Markets

We have stated in this space that clean energy is the wave of the future. The technology and industrial might needed to make this happen resides in America. This is the new export of America that will strengthen our economy going forward for decades.

Instead, America has placed its bet on continuing hegemony in the oil market. It couldn’t be more wrong on several levels.

First, oil commodity is finite. None is being created afresh. All we can do is find more of it, refine it more exquisitely to produce more value and products, and use it more stingily to make it last longer. We are learning more ways to extract oil from the earth more ingenious ways; but those ways are more expensive and yield less product. Thus the expense of the latest supplies are higher.

Second, trading and distributing natural gas is difficult and costly, especially by ocean freighter. Natural gas is a by-product of oil exploration; natural gas supplies are large and growing. This is a national strategic asset for America. But its value is more to America because it can be used to replace what oil has powered in the past. Transportation, heating, and manufacturing uses can be powered by natural gas that once was done by coal and oil. The costs will be less, and the damage to the environment will be less. But this only frees up more oil for international distribution and trade.

Third, oil supplies by major users internationally are dwindling and politically challenging to acquire. China is the primary user of oil products on the international market. Her oil reserves are declining. She is forced to purchase oil on the open markets, but has sought those supplies from unstable foreign nations on the African continent. Results have been poor to date. And long-term uninterrupted energy sources will need to come from more reliable trading partners. Although this poses an advantage to American energy trade, the advantage is of limited value due to the next point of discussion.

Fourth, China is committed to cleaner energy sources for its own use. Reports indicate they feel certain they can supply cleaner, cheaper energy to their massive population and land mass cheaper and easier than buying it on the open market. The added bonus is a cleaner environment, too; China needs that result given its dismal pollution levels.

Fifth, China has come to view clean energy as an international advantage she can build in place of America. So the leadership of Clean Energy Futures will be a battle between China and the USA. Early indicators show America may be withdrawing from that contest. That would be a pitiful decision.

However, this situation could be changed without government leadership if industry leaders step up and develop its natural advantage in clean energy while stepping away from the oil base we’ve misused for generations. It’s time this industry truly turned its leadership to the future of new, renewable and clean sources of energy. It is the language of the future. It is the bright economic star of the future.

Why would America back away from this competition?

One wonders. Best we get to work and follow the brighter path.

March 15, 2018