Petrochina, Sinopec and CNOOC are China's three mega state owned mega petroleum companies. These companies have been on a buying spree since February 2009, crude's low end of a multi year trading range. Flush with cash and understanding that China, in ten years will have depleted its own crude resources, these state supported entities have been on a crude supply buying tear, locking in as much petroleum resources as possible, by offering loans and drilling technology with the help of the Chinese government.
China well understands that although new energy substitutes are being developed, these new fuel technologies will likely not be available for twenty or thirty years. Locking in long term supply at current prices places China in a highly favorable strategic advantage.
Currently the United States is dependent upon China to buy our bonds to fund our ever growing debt. In the not too distant future we are likely to become dependent upon China to supply us with fuel to keep our country operational.
Crude near month futures closed today near $71. With depleting supply and increasing demand it is not unreasonable to expect crude 2012 futures to be trading in the $200 to $300 range. At those prices China has gained a major strategic advantage over the United States and places us at a major security risk.
The Obama administration needs to be thinking immediately of how we can incorporate our most abundant fuel resource, natural gas, into our mainstream fuel supply. Failure to take action now places our future into the hands of the Chinese government.
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