China becomes #1 consumer of energy

When you are number two, aren't you supposed to try harder? China reached a major milestone in its history when it was reported by the International Energy Agency that China had over taken the United States of America as the world’s largest energy consumer. This of course is a label that has belonged to us for a very long time and despite what some environmental naysayers would say, it is a label that we should have worn with pride. For years we heard people scold us because the United States consumes 25% of the world’s energy yet has only 5% of the world’s population. Some looked at our consumption as piggish and that somehow we were bad. Yet what those naysayers failed to realize was that consumption helped drive global economic wealth around the globe. The truth is that our leadership in energy consumption reflected our leadership as a global economic growth engine that fed the world. Not only that, the United States was energy efficient in getting better GDP per barrel back on investment than almost anywhere else around the globe. The United States was not consuming too much, the problem was that other countries were consuming and producing too little.

Countries like China that has about 60% of the world population, yet despite that was a distant runner-up in the energy consumption crown. Back in 2000 China consumed only half of what the United States did at that time. The reason of course was that China’s economy, driven by years of communist and socialistic controlled markets, failed to produce the type of economic growth that could support the country with the world’s biggest population and the type of demand growth you would expect in a country in the modern world. China lacked infrastructure and the industrial output that would create wealth that could support that type of demand. Chinese citizens a decade or so ago had more bikes than cars and millions in the country did not even have electricity and still don’t have electricity to this day.

Now China has assumed its rightful place as the world’s top energy producer after decades of playing catch up and decades now of a strong upward growth trend. Still despite this noble achievement, shouldn't they be consuming even more? The IEA says that China consumed the equivalent of 2,252 million tons of oil last year. That according to the IEA is roughly 4% more than the U.S. used. The U.S. demand oil equivalent which measures oil, nuclear, coal, natural gas and renewables showed U.S. demand at 2,170 million tons.

Despite this great honor and the billions of dollars in economic stimulus that it took to achieve this China says it is not so. China says that the International Energy Agency data is unreliable. The International Business Times reported that, "in February, China’s National Bureau of Statistics had put the total energy consumption in the country at 2.132 billion tons of oil equivalent. Both the agencies deploy different techniques to calculate the energy consumption leading to variations in the assessments, said a NEA official, according to the China Daily. Commenting that the IEA report ignored China’s measures to reduce energy consumption and carbon emissions, Zhou Xian highlighted the country's contribution to carbon-free energy generation. He said China has surpassed us in generating clean energy from various sources such as hydropower, solar power, nuclear power and wind power.”

Well obviously China has liked that number two energy position because it likes to be the underdog when it comes to carbon reduction talks. China is still far less efficient when using energy. The United States uses more oil per ton per person because our population is much less than China's. The Wall street Journal says that the United States used 7.1 tons of oil per person and in China they used 1.7. Of course in China they have millions that hardly use any.

Many feared that when China became the world’s leader in energy consumption the world would have hit peak oil. There were those who estimated that oil prices would be $200 a barrel or more. Yet instead we find ourselves with an oil glut. In fact the only thing that moved the oil market yesterday seemed to be stock market optimism or pessimism and the threat of storms in the Gulf. Now one tropical wave is gone but another has seen the odds of it becoming a hurricane increase from 20% to 30%. Still the odds are not high enough to keep the markets focus off of the stock market and to lesser extent the euro. The euro has shown some good strength and technically looks like it wants to move higher. Still as we have been saying oil has been in a range so make sure you respect that.

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at Learn even more on our website at


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