WASHINGTON, April 18: Record high crude oil prices above $70 a barrel could drive the United States and China — the world’s two biggest oil users — to seek common ground on thorny energy issues when Chinese President Hu Jintao visits Washington.
The United States is the world’s biggest oil consumer but China’s demand is growing the fastest, leaving both vulnerable to supply shocks, experts say.
“If you actually look at the United States’ and China’s interests as major consumers in the system, there’s an awful lot that we should be working together on,” US Deputy Secretary of State Robert Zoellick told the Institute for International Economics on Monday.
The United States will use 21.4 million barrels per day (bpd) of crude oil next year, versus 7.9 million bpd in China, according to the US Energy Information Administration.
US crude oil futures hit a record $70.88 a barrel on Tuesday on fears that a diplomatic face-off over Iran’s nuclear program might crimp exports.
And rising demand in China could add as much as $14 a barrel to world crude oil prices over the next five years, according to the Congressional Budget Office.
Mr Zoellick said US officials could seek stronger cooperation with China on energy efficiency, maintaining stability in Latin America, and crude oil stockpiles.
Energy Secretary Sam Bodman has no plans to meet one-on-one with Chinese officials this week, a department spokesman said. The department has opened an office in Beijing to consult on energy issues, and US officials will travel to China in June to discuss energy cooperation.
Mr Hu’s summit with President George Bush will likely be dominated by discussions of Iran’s nuclear ambitions, trade and currency issues.
ALARMIST: China has alarmed some US lawmakers by inking deals in oil-rich nations like Sudan and Iran, and by signing aggressive supply deals in Canada and Venezuela to lock up future supply.
But attempts to portray China as an energy-hungry nation hell-bent on securing supplies are too alarmist, said Bates Gill, a China expert at the Centre for Strategic and International Studies in Washington.
The talks between Mr Bush and Mr Hu this week could lead to an expanded energy dialogue that is ‘badly needed to defuse what is sometimes an overexaggerated sense of competition and a new cold war over energy resources’, Mr Gill said.
A move by a Chinese-owned corporation last year to buy US-based Unocal Corp set off a furore on Capitol Hill because Republicans said the government backing gave the Chinese entity an unfair advantage.—Reuters
