China imported record breaking amounts of foreign oil last month, passing the U.S. as the world’s top oil importer, according to new reports.
China’s spike in oil imports is largely due to the dramatic growth of the country’s economy over the last decade; which far surpassed the country’s domestic oil production. As China’s need for oil rose, America’s fell, and as domestic oil production surged due to hydraulic fracturing, or fracking, rising demand for oil slowed — causing the U.S. to import far less petroleum.
This is the third month in the last year in which Chinese oil imports have surpassed those of the U.S. Oil industry analysts told Reuters that the current import surge in China is likely due to the country filling its new strategic petroleum reserves. The two other months were due to independent Chinese oil refineries ordering more oil than usual.
China surpassed the United States as the world’s largest net importer of petroleum in 2013. It is expected to buy roughly 70 percent of its oil from foreign sources within the next few decades, largely from states known for instability. Sudan alone provides 7 percent of China’s oil imports, and over one-third of Chinese oil imports come from sub-Saharan Africa. Some of China’s largest oil suppliers are Angola, Sudan, Nigeria, and Equatorial Guinea, which are all known for political instability.
The two largest suppliers of Chinese oil, Russia and Saudi Arabia, are more politically stable but are involved in Middle Eastern conflicts. China prefers to avoid being drawn into such confrontations, especially given recent tensions with its own Muslim minorities.
America had been the world’s top oil importer since the mid-1980s. As recently as 2005, the U.S. imported as much as 65 percent of its daily oil needs, but as recently as 2014 the country only imported 25 percent of its oil. That’s the lowest level since 1985, according to government data.However, America surpassed both Saudi Arabia and Russia in oil production early last year and is now the world’s largest and fastest-growing producer. American oil production in 2015 was 80 percent higher than it was in 2008.
The majority of this new American oil production was provided by fracking, according to the Energy Information Administration (EIA). Fracking accounted for 51 percent of American oil production in 2015.
Of the oil the U.S. does import, about 40 percent came from Canada last year while only 16 percent came from countries in the Persian Gulf, according to the EIA.
America is even exporting crude oil to other countries, including members of the Organization of Petroleum Exporting Countries (OPEC) after repealing a ban on exports in December. Venezuela, a member of OPEC, has been forced by its failing economy to accept its first shipment of American crude oil in early February, despite having some of the world’s largest petroleum reserves.
Exporting oil is expected to boost U.S. gross domestic product (GDP) by $38 billion, reduce the trade deficit by $22 billion and add 300,000 new jobs by 2020, according to another study by ICF International and the American Petroleum Institute. Another study by the Aspen Institute estimates that exporting oil could allow America to remain the world’s largest oil producer while creating up to 1.48 million jobs.
China is largely unable to have its own shale revolution because its shale reserves, though large, would be prohibitively expensive and technically difficult to process. Chinese shale oil is estimated to be economically recoverable at $345 a barrel — more than triple the price of American oil shale.
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