Cultural Revolutions

The Price of Oil

Oil prices have been soaring, yet the U.S. media has overlooked one of the chief reasons why.  The 2005 Department of Defense report on “The Military Power of the People’s Republic of China” cites Beijing’s growing need for foreign sources of metals and fossil fuels as a “driver of strategy,” noting that these account for 60 percent of China’s imports.  It is pushing China into closer ties with a variety of unsavory but resource-rich regimes, such as Iran, Sudan, and Venezuela.  It is also bringing U.S. and Chinese interests into conflict.

Americans feel this rivalry every time they stop at a gas station.  The price of a barrel of West Texas Intermediate oil had risen from $18 in November 2001 to a record $68 by the end of August.  This is similar in real terms to the price jumps of the 1970’s.  But while those spikes were the result of politically induced “supply shocks” of limited duration, the current rise is from increased global demand, which will continue indefinitely.

China is driving the system in her role as “workshop of the world.”  She is moving beyond textiles, toys, and consumer electronics into the heavier manufacturing of automobiles, steel, shipbuilding, petrochemicals, and high-tech industries.  Her own demand for goods is expanding, but so is production for export and for import-substitution. ...

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