OVER THE past few weeks, demagogic political figures have threatened America's economic future by parroting tired lines about energy independence and the threat of a rising China.
The source of these cries stems from the attempted purchase of the American oil firm, Unocal, by the Chinese state-run petroleum corporation, China National Offshore Oil Company. The fallout from this attempted purchase led the House of Representatives to adopt a resolution by a margin of 398 to 15 which objected that the sale would jeopardize American energy resources and bolster Chinese attempts to replace America as the world's leading economic power.
Although these claims have drawn significant attention, in reality energy independence is a fanciful illusion, and the vastly overstated Chinese threat to America's petroleum supplies is nothing more than a scape goat for ambitious politicians. Moreover, these claims not only make it nearly impossible for America and China to work together to solve the world's growing energy crisis, but also greatly increase the prospects for conflict between the two nuclear armed global giants.
The most basic problem with any arguments about maintaining America's "energy independence" is that it is impossible for any country to maintain energy independence in the face of a global energy market. Because producers and distributors of oil are free to sell their product to any buyer across the globe, the price of oil is set at a uniform level across the globe. This means that no energy policy can succeed only by protecting domestic production and that all energy policies must instead focus on influencing the global market for oil.
Since it is impossible for any nation to horde oil production by establishing a surplus in their domestic market at the expense of shortages in international markets, Chinese moves toward acquiring petroleum interests in the United States should not be seen as a mercantilist grab at petroleum resources, but instead as part of the natural functioning of the global energy market.
While the Chinese purchase of Unocal could not possibly pose a threat to American energy security, a belligerent response from demagogic politicians certainly could. In an energy environment characterized by skyrocketing demand and stagnant supply, Chinese-American cooperation will be vital to averting a major energy crisis.
Indeed, if American and Chinese officials in government and in petroleum firms cannot work together to invest in new sources of oil production and encourage development of alternative fuels it will be much more difficult to avert a major energy crisis. Cooperation on such matters is particularly important in light of the threat of political turmoil in important oil producing nations such as Nigeria and Venezuela, and the warnings of former Bush advisor Matthew Simmons that crucial Saudi Arabian oil fields could be approaching a swift decline in production. Failure to adequately respond to an energy crisis precipitated by one of these problems would pose a much more serious threat to American economic health than would any illusory threat to energy security.
Moreover, congressional protests to the Chinese purchase of Unocal also threaten to create destructive conflicts between the two nations. Indeed, when government leaders hamper China's access to the market for oil, they encourage them to gain access to petroleum resources through intimidation and force rather than competition and bargaining. The potential of such policies to create adversarial relations was shown when the Washington post reported that Chinese officials harshly condemned the congressional resolution criticizing their attempted purchase of Unocal. If such policies continue, it is likely that China and America will increasingly come into conflict as the distribution of oil becomes increasingly politicized.
In the end, the extent to which American and Chinese officials can avoid conflict and cooperate towards solving the world's pressing energy problems is largely dependent on the extent to which political leaders in Washington are able to set aside their harsh rhetoric in favor of a rational appraisal of American interests in cooperation with China. Hopefully they will make this realization before the American people have to pay the price for their mistake.
Adam Keith is a Cavalier Daily associate editor. He can be reached at akeith@cavalierdaily.com.
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