Tuesday, June 14, 2005

The next shitstorm

While I was offline in Europe, I had to rely on watching CNN (awful) and reading the IHT (only slightly less awful) for English language news most of the time. (A few hotels had a BBC feed, but it seems they were convinced nothing other than the Michael Jackson trial was worth reporting on.)

One story that made it into the IHT was the fact that "a leading Chinese oil producer, CNOOC, ... was considering making a competing bid to Chevron's $16.4 billion offer for Unocal as energy demand increases pressure on China to pursue oil supplies."

The blogosphere seems strangely quiet on this one. The Downing Street memos are the better story, no doubt. But unless the DSM awakes the MSM from its torpor, the Unocal story is the opening salvo of a war that will make Iraq look like a poodle fight.

America's economy, foreign policy, internal future, and wet dreams of hegemony are all tied to cheap oil. And the way we have kept oil cheap is by being the 800-pound gorilla (also guerilla) of the world energy market. OPEC controls some of the supply, but make no mistake that American Big Oil calls the shots for the world energy market.

We all know that China's economy is growing like bamboo ( a mind-boggling 9% annual rate for the 25-year period from 1978 to 2003), and that it is increasingly willing to flex its muscles in politics and international finance. Less well-known is the fact that China is now the 2nd largest consumer of energy in the world.

Put these two facts together, and you have to look at what is going to happen as China's growing productivity and affluence collide with our SUV addiction. China, which may be less than a true free market at home, has no problem bitch slapping us with Adam Smith's invisible hand at the most macro level. So the first thing that seems to be happening is that they are trying to buy a secure supply by bidding on Big Oil.

The decision tree on this one quickly gets too difficult for me to follow. In most ways, the Bush Administration is simply the policy arm of Big Oil. Who will man the marionettes if the Chinese take control of Big Oil? Will the champions of the free market stand by if the Chinese outbid us fair and square for the energy (and control of that energy) we have taken for granted?

Today the Republicans rant about the War on Terrah, and we whine about the Republican war on the rest of us. Very soon, we will all be talking about how we lost the war for energy to the Chinese while no one was looking.


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