China has overtaken the US to become the world’s largest net oil importer, according to US estimates, as its steady increase in imports has crossed over with the steep decline in America. The US government’s Energy Information Administration said on Tuesday that in September the gap between oil consumption and domestic production averaged 6.24m barrels per day in the US, and 6.3m b/d in China.
Estimates from different analysts vary, and the numbers are subject to revision, but the EIA said the trend was expected to continue, with China extending its lead as an oil importer over the US next year. David Goldwyn, a former US State Department official who is now an energy consultant, said: “We’ve had a radical change in supply and demand in the US, [and] that change is long-term.” The US had been the world’s largest importer since moving ahead of Japan in the 1970s, as a result of the decline in its production that began at the start of that decade. In the past five years, however, that decline has gone into reverse, thanks to advances in the techniques of hydraulic fracturing and horizontal drilling that have unlocked previously inaccessible reserves in shale rocks.
Booming production from shales such as the Eagle Ford of Texas and the Bakken of North Dakota has raised US output of liquid fuels by more than 40 per cent since 2008 to about 12.2m b/d, and the EIA expects further growth to 13.2m b/d next year. US oil demand, meanwhile, has dropped about 4 per cent in the past five years, to about 18.7m b/d this year, as a result of improved fuel economy for vehicles and decreased car use. Over the same period, China’s oil demand has risen by more than 40 per cent, to about 10.7m b/d this year, the EIA says. China’s oil production has also risen, but only by about 10 per cent, to 4.46m b/d.
Philip Verleger, another former US official now an energy analyst, predicted that US production would keep rising as the shale boom continued, while demand would continue to fall as a result of new fuel economy standards and a shift from diesel to natural gas for fuelling trucks. He said that although high oil prices had had an effect in curbing US oil consumption, the reductions were likely to persist even if strong US production growth drove the price back down. “We are past the point where demand is recoverable,” he said.