Monday, June 27, 2005

China thirsty for oil, willing to pay

The Chinese bid to purchase oil giant Unocal is a clear indicator of a market force that has driven oil prices up in recent years--China's growing economy needs the fossil fuel.

China's takeover bid for Unocal Corp. makes clear to sticker-shocked Americans that the 1.3 billion Chinese people are demanding an ever-larger supply of the world's energy to fuel their booming economy and are willing to get it wherever necessary.

From Central Asia to Latin America, Africa, the Middle East and even Canada, Chinese firms are pumping oil and natural gas in many areas that the United States was counting on to meet its own record-high demand.

"We need to supply our people, and like every country we need to buy oil from around the world," said Zhou Dadi, director general of the Energy Research Institute, the central government's main policy agency on the subject. "This is part of globalization. It is a strategy of sustainable development. It is part of a historical process."

Clearly relying on oil is a different concept of "sustainable development" than we have in the U.S. My hunch is that a truly sustainable development model will emerge as a result of market forces--whereby we rely less on oil globally and more on alternative fuels.