China's Scramble for Oil Firing Up Global Competition

Higher oil prices should discourage the use of SUVs, force people to turn down their thermostats and cut demand.

Published: 04-Feb-2005

N class=bodytext>Look at this imbalance: The average American consumes 25 barrels of oil a year. In China, the average is about 1.3 barrels per year; in India, less than one.

So as the 2.4 billion Chinese and Indians move to improve their living standards, they’re going to want more oil — likely more than can be produced.

That perceived shortage is setting off an intensifying scramble to tie up oil reserves around the world. So far, China has been the most aggressive player. But the competition is just getting going.

The pattern is clear. China has been weighing buying Unocal, a major U.S. oil firm. In December in Beijing, Venezuelan President Hugo Chávez promised to open that nation’s oil and natural gas fields to China. Russia, in effect renationalizing the giant oil subsidiary of Yukos, may offer China a 20 percent chunk of the new firm.

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