The Significance of China Passing the USA In Energy Consumption
The International Energy Agency has announced China has passed the USA in annual energy consumption. The question for many is what is the significance of this?
The future is very hard to predict. If it wasn’t, I would’ve purchased as many shares of Microsoft as I could in the 1980s. Sadly, that did not happen. When it comes to energy, the future has been fairly predictable. Energy use will be going up dramatically as countries like India and China grow more affluent. The only real question has been when.
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The when has now been answered. China appears to have passed the energy consumption level of the United States in 2009. Interestingly, China is denying by stating the date used by the IEA is unreliable. Perhaps it is, but the trend is very clear. China is blooming like a flower and its energy usage is undeniably going up and up and up. If it didn’t pass the United States in energy usage in 2009, it will soon.
So, what is the significance of this? In some sense, there is none. It is just an artificial plateau and hardly surprising given the fact the United States has just over 300 million people while China measures its population in the billions. On the other hand, it is a sing that the future predictions for energy usage as China and India grow are accurate.
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Practically speaking, the biggest initial question has to do with oil. The maximum production rate a day is currently in the 85 to 87 million barrel range. The current usage rate is about 83 to 84 million and this is only because the Great Recession created a pull back on energy usage.
So, what happens as we start collectively needing more oil than the world can produce? Prices will rise and political pressure will become extreme to say the least as countries compete over finite resources. This makes many people nervous given the potential for big time conflicts. Perhaps solar and other renewable energy sources can help fill the gap.
Let’s hope so.
