Clear The Air Energy Blog Rotating Header Image

China Not To Blame For Rising Oil Price

China not to blame for rising oil price, says Xi

Vice-president puts country’s use at half the world average

Eric Ng – Updated on Jun 24, 2008 – SCMP

Vice-President Xi Jinping hit back at criticism the mainland is guilty of energy gluttony as a Middle East oil summit failed to arrest a global increase in crude prices.

In midday trade in New York, oil futures were up US$2.46 at US$137.82 a barrel, as a decision at the summit by Saudi Arabia, the world’s largest oil producer, to raise output by 2.1 per cent was more than offset by militant attacks in Africa that saw Nigeria’s daily output cut to 1.5 million barrels, the lowest in 25 years.

China and India have been blamed for a doubling in oil prices in the past year as their rapidly developing economies and infrastructure increase global energy demand.

Speaking at the summit in Saudi Arabia between the key oil using and producing countries, Mr Xi said the mainland supplied more than 90 per cent of its own energy needs and consumption levels were below the world average on a per capita basis.

“Even with fast economic growth, China’s overall consumption level is relatively low with per capita energy consumption at 84 per cent of the world average,” he told the meeting at the weekend. “Per capita oil consumption is half the world average and oil imports are 37 per cent of the world average.”

He said China, the world’s second-largest energy consumer, would make energy conservation a priority, rely on domestic resources for energy production and tap into an array of alternative energy sources to dilute heavy reliance on coal and promote environmental protection.

Alternative energies could include wind, solar, hydro and nuclear power, ethanol, methanol and fuel derived from liquefied coal.

With much of their populations in rural farming communities, China and India subsidise energy costs for the poor, adding to criticism about their consumption.

Mainland officials have argued China should be given the opportunity to develop its economy, although they conceded the nation needed to do its part to promote more sustainable energy consumption given concerns about fossil fuel depletion and pollution.

According to the International Energy Agency, China will account for 33 per cent of world oil demand growth from last year to 2030 while India will make up 12 per cent.

Beijing last week said it was raising domestic retail petroleum prices by for the first time in seven months by between 16 per cent and 25 per cent. Retail electricity tariffs were increased by an average 4.7 per cent.

“The price rises were a pre-emptive measure to steer away any finger-pointing at China,” said Victor Shum, a senior principal at energy consultancy Purvin & Gertz.

“Part of the problem is that controlled prices in places like China encourage oil demand growth.”

Robert Blohm, an economist and energy consultant, said by comparing energy consumption on a per capita basis, Mr Xi was arguing a “moral and fairness” issue.

“What’s also important is China’s percentage in global energy demand growth,” he said. “As one of the last consumers setting prices for all consumers, China has particular responsibility in global oil price setting.”

He said the recent price increases were a step in the right direction, but China was far from having market-based energy pricing, which is key to restoring demand and supply balance and effective conservation.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>