For over two years, T. Boone Pickens has been warning that, without an energy policy, America would find itself in a bidding war for oil against China. Sure enough, the Wall Street Journal, this morning has an article written by reporter Brian Baskin which makes Boone’s point – two years on.
“For the first time since Beijing hosted the Summer Olympic Games in 2008, China this month may become a net importer of diesel. That demand spike-China was stocking up in case it needed backup fuel-played a role in oil’s climb to its record of $145 a barrel.
“This time, market participants believe China’s demand may be more permanent. And that suggests the recent rally in oil prices may have a strong tailwind. Diesel is made from oil, so added demand for diesel means more oil will need to be processed.”
Morgan Stanley has projected oil prices rising to $100 per barrel in 2011 “for the first time since 2008.”
Crude oil opened on Monday at $86.42 which is seen as the result of the Fed’s monetary announcement last week and the continuing upward pressure of China’s demand.
China’s middle class is experiencing explosive growth leading to a demand for consumer goods including automobiles. According to the WSJ article “sales shot up 19% between August and September, and 9.9 million vehicles were sold in China through the first nine months of the year.”
The article concludes:
“The rise in China’s oil demand, which took off more than five years ago, shows no signs of slowing. In September, China imported a record 5.7 million barrels a day of crude, up 24% from year-earlier levels.”
Our nation’s reliance on foreign oil represents an ongoing risk to the health of our economic and national security. Thankfully, many Members of Congress from both political parties have supported policies to reduce this reliance on foreign oil and onto American resources like abundant, cleaner natural gas. We can get this done this year if Congress finishes what it started when it returns later this month.
— The Pickens Team