In October, China is set to unseat the United States and become the world’s largest importer of crude oil highlighting the country’s rising class of drivers who are having a greater demand for the precious commodity.
The news comes from a report by the U.S. Energy Information Administration Report who says the shift will mark the first time the U.S. has slipped to second place. China already is the top importer of oil from the Middle East, however oil has been increasingly produced from other countries such as Canada, the United States, Venezuela, Brazil and others. As a result of these other countries producing petroleum, the Organization of Oil producing Countries (OPEC), does not have the economic clout it had in previous decades.
While China’s dependence on larger amounts of imported oil has been on the rise for years, its demand has grown particularly intense this year as the company has seen a huge increase in the amount of cars sold in the country, which surged to over 19 million units sold last year. With over 1.3 billion consumers, China has been the largest market for autos since 2009.
The increased auto sales have resulted in the country’s consumption of oil to increase by 13 percent to 11 million barrels a day between 2011 and 2014.
The increase demand to import oil by China comes at a time when the U.S. is reducing its demand on imported oil. Last year the U.S. increased production of oil from shale deposits in North Dakota and Texas to record amounts. The increased production from American producers allowed them to export some of its surplus to Latin American nations and other countries.
In addition to the surge in U.S. oil production, American made cars have also been becoming more fuel efficient as the result of stringent requirements placed on vehicles manufactured in the U.S. by the federal government. The factors have resulted in a decrease in U.S. production from 20.8 million barrels a day in 2005 to 18.7 barrels.
While China has large shale deposits just as the U.S. does, it is years from being able to exploit the technology which is recovered through unconventional methods because it lacks the technological expertise to do so.
“The last time the United States saw a similar surge in crude oil production was in the late 1970s and early 1980s when Alaskan crude oil production was on the upswing,” Gary Thayer, an analyst with Wells Fargo told the Washington Times.
“It helped the U.S. trade deficit to narrow and the value of the U.S. dollar increased in the early 1980s after a decade of weakness,” all of which led to a stronger economy and lower inflation, he said. “Many of the same conditions exist again today.”
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