For years, China alone propelled fully 50 per cent of the annual world growth in oil demand. Slower growth in China may prevent it from supporting global energy demand for a while. “The oil price will be range-bound between $60 to $80. There’s not another cycle coming. You look at China’s infrastructure – it’s built.”
China has already become uniquely important as the world’s largest importer of oil, buying roughly 60 per cent of its 10-million barrels per day from others. And Mr. Xie believes China’s vast energy demand, beyond oil alone, will play an even more outsized role in the future: “My call is based on the oil price eventually following China’s coal price,” he said. “China’s coal is equal to four Saudi Arabias in energy equivalent.”
No matter what, the downturn in prices stands to accentuate China’s influence by providing it an opportunity to cheaply augment its strategic reserves – already believed to stand at 90 days. That in turn “gives China the potential, or the option, of using it as a political-economic tool to their own advantage,” said Philip Andrews-Speed, a principal fellow with the Energy Studies Institute at National University of Singapore.
The outlook for the global economy is “much brighter” with Brent crude at $70 (U.S.) a barrel, just shy of where it stands today, compared to June’s $110, said Julian Jessop of Capital Economics in London. “Roughly speaking, the $40 fall in the price of oil represents a transfer of annual income of around $1.3-trillion from oil producers to oil consumers, equivalent to 1.7 per cent of global GDP,” Mr. Jessop said in a report today.
US oil imports in 2014 are now down to about 5 million barrels per day
The mere fall in oil prices is a huge win for China: the basic math of a tumble from $115 to $72 a barrel suggests annual savings to the country’s drivers and industrial users equivalent to more than 1.5 per cent of current GDP.
China saves about $100 billion each year on the 7 million barrels per day that they import.
All of the oil producing countries like Russia are economical hurt. Canada’s dollar loses between 3 cents and 5 cents for each $10 drop in the price of oil.
SOURCES – Globe and Mail, Energy Information Administration
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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