40% of U.S. Adults Believe We Are Living in the End Times By Dr. David…
China’s Addiction to Middle East Oil
By Todd Strandberg
The more I understand world events, the more convinced I’ve become that there is a Supernatural God guiding world events. Just as China began a massive surge in its consumption of oil, the U.S. began lowering its need for foreign oil with the fracking revolution. Many books have been written that argue that China and America are destined for war because of black gold. We remain at peace because the market has been able to maintain a near-perfect balance between supply and demand.
China is now the world’s largest oil importer. In 1994, the Chinese economy ran completely on the 3 million barrels per (mpd) day that came from state-owned oil companies. Over the past 24 years, consumption has shot up to 13 mpd. China now needs to import 8.5 mpd to keep its economy going.
There is no indication that China’s oil demand is leveling off. If you look at a chart of Chinese oil consumption growth, it’s moving up at a 45-degree angle. A nation of 1.4 billion people could easily triple its oil consumption and still be nowhere near America’s daily usage of petroleum.
The security of oil flows has been an increasingly pressing worry for Chinese leaders. A large percentage of China’s crude imports come from countries in the Middle East, including Iran and Iraq. While the U.S. has become carefree about troubles in the Middle East, China’s president has made numerous trips to Arab capitals to keep tabs on his oil suppliers.
The change in the flow of oil from West to East has brought into question the need for the petrodollar standard. This is an agreement the U.S. struck with Saudi Arabia to standardize oil prices in dollars. China is seeking to introduce a new gold-backed, yuan-based oil benchmark. Trade in oil futures would switch from West Texas Intermediate to the Shanghai. Russia and Iran are heavy backers of this plan because they know it would help to unseat the U.S. dollar as the world’s reserve currency.
The response to China’s power grab for oil has been pure delusion on our part. Every few days I read about some nation saying that by the next couple decades they are going to have 100 percent battery-powered cars. Germany has the fourth largest car manufacturing industry in the world, and its federal council (the Bundesrat) has passed a resolution that calls for a total ban on internal combustion engines by 2030. Norway decided to follow and outdo Germany by setting a 2025 target where only 100 percent electric cars will be allowed at dealerships.
There are about 1.2 billion vehicles on the world’s roads, and there is no way we could replace them with battery-powered engines. To make a rechargeable car that can go long distances requires a battery made from lithium, nickel, cobalt, vanadium, cadmium, and lead. Some of these metals are classified as rare-earth elements.
Cobalt would be the mother of supply-chain headaches. As much as 65 percent of this global supply comes from the Democratic Republic of Congo (DRC), where cobalt production has fallen this year because of the unstable political situation. This sparked a 90 percent jump in the price of cobalt to a peak of $61,000 a ton earlier this month.
These environmentalist dreamers might as well mandate that by 2020 all travel will be conducted by teleportation machines. As a result, all maintenance on roads will immediately come to an end. The stocks of oil companies may go bust, but I doubt it will because of a decline in the price of oil.
The recent oil glut is mostly the creation of deficit spending. The oil industry has maintained its production levels by going deeper and deeper into debt. Since the 2008 global economic and financial crisis, the top seven oil companies have seen their total combined debt explode four times, from $96 billion to $379 billion currently. In 1997, Chevron enjoyed a $3.2 billion net profit on revenues of $42 billion. Last year, Chevron lost $497 million on total sales of $114 billion. Even though Chevron’s revenues nearly tripled in twenty years, it’s a money-losing venture.
Unless there is a massive spike in the price of oil, the big oil firms are going to eventually implode. Since OPEC has a lock on most of the world’s cheap oil, we may return to the days when this organization was able to dictate the spot price of crude. Now that Beijing has become OPEC’s biggest customer, it would mean for us to try to regain our old market share of Arab oil.
There may be some other reason why China is part of a 200-million army that invades the Middle East. Since numerous wars have been fought over oil in the past, it is logical to conclude that more wars will be fought in the future.
“And the sixth angel poured out his vial upon the great river Euphrates; and the water thereof was dried up, that the way of the kings of the east might be prepared” (Revelation 16:12).
“And the number of the army of the horsemen were two hundred thousand thousand: and I heard the number of them”(Revelation 16:16).