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As The U.S. Wages War On It China Reacts With Defiance
Just as U.S. Secretary of Commerce Gina Raimondo returns from China her department issues new restrictions on chip deliveries:
The United States has broadened restrictions on the export of high-performance artificial intelligence chips by Nvidia and Advanced Micro Devices (AMD), extending them beyond China to other regions, including some countries in the Middle East, amid rising concerns about Beijing’s access to critical AI resources.
Reuters reported Thursday that a regulatory filing by Nvidia stated that its state-of-the-art A100 and H100 chips, which speed up machine learning on AI apps such as ChatGPT had been put on a “no-export” list.
The attempt is to prevent 'leaks' of chips from countries like the United Arab Emirates or Saudi Arabia to Russia and China. But, as I noted yesterday, China is already making chips of equal capacity:
Huawei's compute GPU capabilities are now on par with Nvidia's A100 GPUs, Liu Qingfeng, founder and chairman of Chinese AI company iFlytek, said at the 19th Summer Summit of the 2023 Yabuli China Entrepreneurs Forum (via IT Home).
Liu Qingfeng stated that Huawei has made significant strides in the GPU sector, achieving capabilities and performance comparable to Nvidia's A100 GPU.
China is not only autarkic in making chips but now also in making the delicate machines needed to make chips:
China’s etching equipment giant Advanced Micro-Fabrication Equipment (AMEC) has reported hefty growth in earnings and revenue in the first half of 2023 thanks to strong demand for local tools as a result of US tech export controls, the company’s founder and CEO Gerald Yin Zhiyao said on Friday.
…
AMEC’s market share of China’s capacitively coupled plasma (CCP) etching equipment market is expected to reach 60 per cent in the near future from 24 per cent last October, Yin said. In the inductive coupled plasma (ICP) tool market, Yin said its share could rise to 75 per cent from almost zero after once-dominant Lam Research from the US saw its share drop sharply.
…
As China deepens its semiconductor self-sufficiency drive to include chip-making equipment and key components, Yin said that 80 per cent of restricted, imported parts at AMEC can be replaced domestically by the end of this year, with 100 per cent replacement following in the second half next year.
The New York Times resume of Secretary Raimondo's and other's trips is somewhat amusing:
U.S. Officials Are Streaming to China. Will Beijing Return the Favor?
Batteridge's law responds with "No!" There were obviously no 'favors' from either side:
When Gina Raimondo, the secretary of commerce, left China this week, it marked the end of a three-month diplomatic blitz by the Biden administration to try to stabilize ties with Beijing and arrest a free fall in the relationship that had raised concerns about the risk of conflict.
President Biden had bet that high-level dialogue could help manage an escalating rivalry over trade, technology and the status of Taiwan. Secretary of State Antony J. Blinken was the first to make the trip to the Chinese capital in June, followed by Treasury Secretary Janet L. Yellen and the presidential climate envoy, John Kerry, in July.
After logging all those miles, the question now is whether China will reciprocate by sending senior Chinese ministers to Washington.
The people Biden sent on visits in China had nothing to give and were given nothing. The U.S. attempt to deceive China by holding useless talks while it ramps up its cold war cordon around China have failed.
As long as that policy continues there is nothing of substance that China could gain by sending people to Washington DC. Holding talks just to keep talking about nothing does not make sense. So evidently no Chinese envoy will come.
Patrick Lawrence is trashing Biden's strategy as he finds that the travels to China are not designed to talk with Chine but to deceive Americans:
Proposing to conduct routine business while sabotaging China’s competitive position in advanced technologies is prima facie a ridiculous idea.
…
The Biden administration’s China strategy comes down to parrying, in a word. All the pointless talk is intended to obscure a concerted effort to undermine China’s economy because the U.S. cannot compete with it in various strategic sectors, while — part two — buying time to move maximum U.S. military hardware as close to the mainland as possible under the program the Defense Department named a few years ago the Pacific Defense Initiative, the PDI.
…
The Chinese know this and have said so many times. I no longer think Blinken, Yellen, et al. have any thought of persuading them otherwise on these journeys. That only looks like their intent.
Their true purpose is in the way of theatrical, and Americans are their true audience: They must make sure Americans do not understand Gina Raimondo’s efforts to punch the Chinese, well below their belts, for what they are: an uncompetitive nation’s attempts to hold back a rising economic power.
…
The Biden regime is buying time as it remilitarizes the western end of the Pacific.
The only people who are supposed to understand otherwise are Americans, who are not supposed to watch as Washington provokes and prosecutes Cold War II. Americans are supposed to watch as U.S. officials — reasonable, constructive, well-intended —make all efforts to talk to the Chinese in the face of their stubborn reluctance to cooperate.
This is my revised take on the Blinken–Yellen–Kerry–Raimondo cavalcade across the Pacific. These people are not clods. They are purposefully malicious and, it should go without saying, are making the world even more dangerous than it already is.
Peter Lee has just come back from a visit to China. He is reporting of of a new, someone snobby to hostile attitude towards Americans. It is justified:
After all, America and Americans are suspect for good reason.
As I’ve pointed out on my twitter several times, US aggression against the PRC, misleadingly packaged as US-China tensions, is a virtual full-spectrum assault, only stopping short, for now anyway, of direct military action. The US is determined to degrade the PRC’s military, economic, and international security and domestic social and political stability in all available dimensions. Concessions are tactical; attacks are strategic.
…
The CCP perhaps hopes Western failure in Ukraine will slake the G7 thirst for anti-authoritarian jihad and hopes economic relations and foreign direct investment with China will recover but hope is not a plan. Not with the United States pumping hundreds of billions of dollars to finance global anti-PRC economic, military, diplomatic, political, soft power, and media initiatives.
I believe this increasingly plausible worst-case scenario is driving a lot of PRC decision-making (and drives the barrage of resentful criticism of PRC policy choices in the Western media).
…
Will the CCP succeed?
The product it’s pitching to its citizens and to the world—that’s multilateralism via economic engagement—is fundamentally more attractive to a lot of countries than the deficit driven global War to Save Democracy that the US is peddling. Given money, perseverance, luck, and time the PRC might be able to thread the needle.
But … there’s that “time” thing. There’s the rub.
My opinion is, if the CCP is succeeding, in other words if it shows significant progress in establishing a robust parallel international order that can shield it from US economic aggression, the US will start a hot war to see if it can truly f*ck China up.
Because the only US response to failure is escalation.
And that’s why my profile says “pessimist”.
As Peter had noted last year China's government has for quite some time prepared for this.
Well, let's hope that it does not come to another war.
But Peter is right. The U.S. is typically willing to double down in its aggressions.
It continues to play dirty games in Asia to get what it wants (h/t Carl Zha).
On August 24 the Defense Minister of Indonesia, Prabowo Subianto, visited the Pentagon. After the meeting the U.S. issued a:
United States DoD and Indonesia MoD Joint Press Statement
Minister Prabowo and Secretary Austin agreed that the ASEAN Outlook on the Indo-Pacific and the United States' Indo-Pacific Strategy share fundamental principles, such as a commitment to maintaining peace, security, stability, and prosperity in the region through ASEAN Centrality, and that we should work alongside partners who share these goals and a commitment to an open, inclusive, and rules-based order. They shared the view that the People's Republic of China's (PRC) expansive maritime claims in the South China Sea are inconsistent with international law as reflected in the United Nations Convention on the Law of the Sea.
That however has not been Indonesia's position. China noticed that the Pentagon was lying. It protested:
JAKARTA, KOMPAS – The Chinese Embassy in Jakarta has objected to the press statement issued by the United States Department of Defense regarding the defense cooperation with Indonesia in the South China Sea. The press statement stated that US Defense Secretary Lloyd Austin and Indonesian Defense Minister Prabowo Subianto both agreed that China's expansive maritime claims in the South China Sea were inconsistent with international law.
"After comparing the US press statement with the press statement released by the Indonesian Ministry of Defense, the sentence that accuses and corners China only appears in the US Ministry of Defense press release," said the objection response signed by the spokesperson of the Chinese Embassy in Jakarta, Monday (28/8/2023)."
Today the Indonesian defense minister confirmed that the U.S. 'Joint Press Statement' is fake (machine translation):
Jakarta, KOMPAS – Defense Minister Prabowo Subianto confirmed that there was no joint statement with the US Defense Ministry when he met US Defense Minister Lloyd Austin last week. Prabowo said that Indonesia is in principle friendly to all countries and adheres to a free and active foreign policy.
“Indonesia's position is very clear. We are non-aligned. We are non-aligned, we are friendly with all countries. So I think that's what matters, " Prabowo said after handing over an electric trail bike for the TNI and Polri at the Ministry of Defense, Thursday (31/8).
Prabowo stressed that there was no joint statement with the US Defense Ministry. The Pentagon said in a joint statement that the two ministers shared similar views on China's maritime claims and expansionist actions in the South China Sea. In this regard, in line with the principle of active freedom, Prabowo again emphasized that Indonesia has good relations with China, the United States and Russia.
The Pentagon's diplomatic faux pas, issuing a 'Joint Statement' when none had been agreed upon, may well become costly. Indonesia and other will surely take note of it and will be prepared to loudly dismiss any recurance.
This is not exactly on topic…. But in many ways, it is…..
https://oilprice.com/Energy/Energy-General/A-World-Running-On-Empty-The-Decline-Of-Fossil-Fuel-Supply.html
By Gail Tverberg – Sep 01, 2023, 6:00 PM CDT
Analysis of 2023 Statistical Review of World Energy data shows constrained global supplies of fossil fuels like oil, coal, and natural gas, particularly in interregional trading.
Constraints in supply are affecting energy prices, making them highly variable and less affordable for consumers, thereby affecting the global economy, including industries like manufacturing.
The cost-intensive infrastructure needed for long-distance natural gas exports is becoming increasingly unsustainable, posing risks to both investors and consumers.
Oil Barrels
For many years, there has been a theory that imports of oil would become a problem before there was an overall shortage of fossil fuels. In fact, when I look at the data, it seems to be clear that oil imports are already constrained.
Figure 1. Interregional trade of fossil fuels based on data of the 2023 Statistical Review of World Energy by the Energy Institute.
As I look at the data, it appears to me that coal and natural gas imports are becoming constrained, as well. There was evidence of this constrained supply in the spiking prices for these fuels in Europe in late 2021 and early 2022, starting well before the Ukraine conflict began.
Oil, coal, and natural gas are different enough from each other that we should expect somewhat different patterns. Oil is inexpensive to transport. It is especially important for the production of food and for transportation. Prices tend to be worldwide prices.
Coal and natural gas are both more expensive to transport than oil. They tend to be used in industry, in the heating and cooling of buildings, and in electricity production. Their prices tend to be local prices, rather than the worldwide price we expect for oil. Prices for importers of these fuels can jump very high if there are shortages.
In this post, I first look at the trends in the overall supply of these fuels, since a big part of the import problem is fossil fuel supply not growing quickly enough to keep pace with world population growth. I also give more background how the three fossil fuels differ.
After this introductory material, I provide charts and some analysis of fossil fuel imports and exports by region, based on data from the 2023 Statistical Review of World Energy. Theoretically, the total of regional imports should be very close to the total of regional exports. This analysis gives a little more insight into what is going wrong and where.
[1] On a worldwide basis, total supplies of both oil and coal seem to be constrained.
Figure 2. World consumption of oil, coal, and natural gas based on data of the 2023 Statistical Review of World Energy by the Energy Institute.
Figure 2 shows that world supplies of all three fossil fuels follow the same general pattern: They tend to rise in close to parallel lines, with oil supply on top, coal next, and natural gas providing the least supply.
The total supply of fossil fuels needs to be shared by the world’s population. It therefore makes sense to look at supply on a per capita basis.
Figure 3. World per capita consumption of oil, coal, and natural gas, based on data of the 2023 Statistical Review of World Energy by the Energy Institute.
On Figure 3, the top line, oil supply per capita, is almost perfectly level, suggesting that having a greater supply of oil enables having a larger world population. This relationship makes sense because oil is used to a significant extent in growing today’s food, and shipping it to market. Oil products also make herbicides, insecticides, and drugs for animals that enable the growing supply of food needed to feed today’s population. Oil products are also helpful in road making, and in providing lubrication for machinery of all kinds.
We might conclude that oil supply is essential to the growth of human population. It is only by way of a huge change in the economy, such as the one that took place in 2020, that there is a big dip in oil usage. Even now, some of the changes are “sticking.” Some people are continuing to work from home. Business travel is still low. People are still not buying fancy clothing as much as before 2020. All these things help reduce fossil fuel usage, particularly oil usage.
Figure 3 also shows that on a per capita basis, coal supply has fallen by 9% since its peak in 2011. This fact, plus the fact that coal prices have been spiking around the world in recent years, leads me to believe that coal supply is already constrained, even apart from the export issue.
[2] The share of oil traded interregionally is more than double the share of coal or natural gas traded interregionally.
The reason why oil is disproportionately high in Figure 1 compared to Figure 2 is because a little over 40% of oil is shipped between regions. In comparison, only about 18% of coal production is traded with other regions, and about 17% of natural gas production is shipped interregionally. Oil is much easier (and cheaper) to transport between regions than either coal or natural gas. Shipping costs tend to escalate rapidly, the farther either natural gas or coal is shipped.
Natural gas has a second problem over and above the high cost of shipping: It requires storage (which may be high cost) if it is not used immediately. Storage is needed for both natural gas and coal because both fuels are often used for heat in winter, either by direct burning or by creating electricity that can be used to heat buildings. Storage for coal is close to free because it can be stored in piles outside.
Besides heat in winter, coal is also used to provide electricity for air conditioning in summer, so its demand curve has peaks in both summer and winter. Natural gas is much more of a winter-heat fuel in the US, so it has a large peak corresponding to winter usage (Figure 4).
Storage for natural gas needs to be available in every area where users expect to use it for winter heat. The cost of this storage will be low if there are depleted natural gas caverns that can be used for storage. It is likely to be high if above ground storage is required. Natural gas importing areas often do not have suitable caverns for storage. The easy approach is to try to get by with a bare minimum of storage, and hope that imports can somehow make up the difference.
The big question for any fuel is, “Can consumers afford to pay a high enough price to cover all the costs involved in getting the fuel from endpoint to endpoint, at the time it is needed?“
Citizens become very unhappy if the cost of winter heat becomes extremely expensive. They demand subsidies and rebates from the government, in order to keep costs down. This is a sign that prices are too high for the consumer.
Both coal and natural gas are also heavily used in manufacturing. Their prices vary greatly from location to location and from time to time. If coal or natural gas prices rise in a particular location, the cost of manufactured goods from that location will also tend to rise. These higher prices will particularly hurt a manufacturing country, such as Germany, because its manufactured goods will become less competitive in the world marketplace. GDP growth will be reduced, and the profitably of manufacturers will tend to fall.
Because of these issues, long-distance trade in both coal and natural gas tend to hit barriers that may be difficult to see simply by looking at the trend in world production.
[3] Natural gas exports may already be becoming constrained, even though the total amount extracted still seems to be rising.
A huge amount of investment is needed to make long-distance sale of natural gas possible. Such investment includes:
The cost of developing a natural gas field for export use, usually over many years.
Pipelines covering every inch traveled by the natural gas, other than any portion of the trip for which transfer as liquefied natural gas (LNG) is planned.
Special ships to transport the LNG.
Facilities to chill natural gas, so it can be shipped overseas as LNG.
Regasification plants, to make the natural gas ready to ship by pipeline after it has been transferred as LNG.
Storage facilities, so that sufficient natural gas is available for winter.
Not all of these investments are made by the same organizations. They all need to provide an adequate return. Even if “only” very long-distance pipelines are used, the cost can be high.
Pipelines work best when there is no conflict among countries. They can be blown up by another country that seeks to raise natural gas prices, or that wants to retaliate for some perceived misdeed. For this reason, most growth in natural gas exports/imports in recent years has been as LNG.
I believe that there is a significant chance that natural gas exports are now reaching a situation where prices cannot please all users simultaneously. Not all investors can get an adequate return on the huge investments that they have made in advance. Some investments that should have been made will be omitted. For example, there might be enough natural gas storage for a warm winter, but not for a very cold winter in Europe.
A prime characteristic of a fossil fuel (or any resource) that is not economic to extract is that the industry has difficulty paying its workers an adequate wage. Recently, there has been news about a union strike against Chevron at an Australian natural gas extraction site used to provide gas for liquefied natural gas (LNG) export. This suggests that natural gas may already be hitting long-distance export limits. Prices can’t stay high enough for producers to pay their workers an adequate wage.
Oil imports by area suggest that the rapidly growing manufacturing parts of the world are squeezing out the imports desired by high-wage, service-oriented countries.
Because oil is so important in international trade, I looked at the amounts two ways. The first is based on trade flows, as reported by the Energy Institute:
Imports for China, India, and Other Asia Pacific are clearly much higher in recent years, while imports for the US, Japan, and Europe are down. The peak year for imports (in total) was about 2016 or 2017. Imports were about 3.5 million barrels a day lower in 2022, compared to peak, with both approaches.
Oil imports by area indicate that nearly all oil exporters around the globe are having difficulty maintaining export levels.
US oil exports are shown to be nearly zero, even in recent years, because US imports and US oil exports more or less cancel out.
Apart from Canada, the amount of oil exported for all the other export groupings shown is lower in recent years than it was a few years ago. This is also evident in Figure 7, but not as clearly.
To some extent, the lower production in recent years is related to running short of oil that can be extracted without considerably more investment.
“Mexico+South” refers to all the oil being produced from Mexico southward. this includes Brazil, Venezuela, Argentina, Columbia, Ecuador, and a number of other small producers. Most of them are experiencing falling production.
Africa’s peak year for oil exports seems to have been in 2007 (both approaches), with recent exports at a much lower level.
The star performer seems to be Canada, with its rising production and exports from the Canadian Oil Sands.
In this analysis, I have “netted out” imports and exports. On this basis, the US hasn’t moved into significant oil exporter status yet.
Coal exports appear to have peaked about 2016. Europe has reduced its imports of coal, leaving more for other importers.
The peak in coal imports seems to have occurred about 2016. In particular, Europe’s imports of coal have fallen significantly since 2006.
Figure 10. Coal exports by area based on trade flow data from the 2023 Statistical Review of World Energy by the Energy Institute.
One thing that is striking about coal exports is that they are disproportionately from countries in the Far East.
Today’s largest source of coal exports is Indonesia.
A major share of the delivered price of coal is transportation cost, which tends to be fueled by oil, particularly diesel. Overland transit is particularly expensive. The real reason for Europe’s decline in coal imports since 2006 (shown in Figure 9) may be that there are practically no affordable coal exports available to it because it is too geographically remote from major exporters.
Natural gas imports and exports have only recently started to become constrained.
The overall level of natural gas exports has been rising because of contributions from several parts of the world. Africa was an early producer of natural gas exports, but its exports have been dropping off somewhat recently as local gas consumption rises.
More importantly, exports have increased in recent years from the Middle East, Australia, and North America. With this growing supply of exports, it has been possible for importers to increase their imports.
[8] What lies ahead?
The countries that have the greatest advantage in using fossil fuel imports are the countries that don’t heat or cool their homes, and that don’t have large numbers of private citizens with private passenger automobiles.
Europe stands out to be an early loser of imports. It is already losing oil and coal imports, and it also seems to be an early loser of natural gas imports.
Posted by: Dr. George W Oprisko | Sep 2 2023 15:14 utc | 331
This is not exactly on topic…. But in many ways, it is…..
https://oilprice.com/Energy/Energy-General/A-World-Running-On-Empty-The-Decline-Of-Fossil-Fuel-Supply.html
By Gail Tverberg – Sep 01, 2023, 6:00 PM CDT
Analysis of 2023 Statistical Review of World Energy data shows constrained global supplies of fossil fuels like oil, coal, and natural gas, particularly in interregional trading.
Constraints in supply are affecting energy prices, making them highly variable and less affordable for consumers, thereby affecting the global economy, including industries like manufacturing.
The cost-intensive infrastructure needed for long-distance natural gas exports is becoming increasingly unsustainable, posing risks to both investors and consumers.
Oil Barrels
For many years, there has been a theory that imports of oil would become a problem before there was an overall shortage of fossil fuels. In fact, when I look at the data, it seems to be clear that oil imports are already constrained.
Figure 1. Interregional trade of fossil fuels based on data of the 2023 Statistical Review of World Energy by the Energy Institute.
As I look at the data, it appears to me that coal and natural gas imports are becoming constrained, as well. There was evidence of this constrained supply in the spiking prices for these fuels in Europe in late 2021 and early 2022, starting well before the Ukraine conflict began.
Oil, coal, and natural gas are different enough from each other that we should expect somewhat different patterns. Oil is inexpensive to transport. It is especially important for the production of food and for transportation. Prices tend to be worldwide prices.
Coal and natural gas are both more expensive to transport than oil. They tend to be used in industry, in the heating and cooling of buildings, and in electricity production. Their prices tend to be local prices, rather than the worldwide price we expect for oil. Prices for importers of these fuels can jump very high if there are shortages.
In this post, I first look at the trends in the overall supply of these fuels, since a big part of the import problem is fossil fuel supply not growing quickly enough to keep pace with world population growth. I also give more background how the three fossil fuels differ.
After this introductory material, I provide charts and some analysis of fossil fuel imports and exports by region, based on data from the 2023 Statistical Review of World Energy. Theoretically, the total of regional imports should be very close to the total of regional exports. This analysis gives a little more insight into what is going wrong and where.
[1] On a worldwide basis, total supplies of both oil and coal seem to be constrained.
Figure 2. World consumption of oil, coal, and natural gas based on data of the 2023 Statistical Review of World Energy by the Energy Institute.
Figure 2 shows that world supplies of all three fossil fuels follow the same general pattern: They tend to rise in close to parallel lines, with oil supply on top, coal next, and natural gas providing the least supply.
The total supply of fossil fuels needs to be shared by the world’s population. It therefore makes sense to look at supply on a per capita basis.
Figure 3. World per capita consumption of oil, coal, and natural gas, based on data of the 2023 Statistical Review of World Energy by the Energy Institute.
On Figure 3, the top line, oil supply per capita, is almost perfectly level, suggesting that having a greater supply of oil enables having a larger world population. This relationship makes sense because oil is used to a significant extent in growing today’s food, and shipping it to market. Oil products also make herbicides, insecticides, and drugs for animals that enable the growing supply of food needed to feed today’s population. Oil products are also helpful in road making, and in providing lubrication for machinery of all kinds.
We might conclude that oil supply is essential to the growth of human population. It is only by way of a huge change in the economy, such as the one that took place in 2020, that there is a big dip in oil usage. Even now, some of the changes are “sticking.” Some people are continuing to work from home. Business travel is still low. People are still not buying fancy clothing as much as before 2020. All these things help reduce fossil fuel usage, particularly oil usage.
Figure 3 also shows that on a per capita basis, coal supply has fallen by 9% since its peak in 2011. This fact, plus the fact that coal prices have been spiking around the world in recent years, leads me to believe that coal supply is already constrained, even apart from the export issue.
[2] The share of oil traded interregionally is more than double the share of coal or natural gas traded interregionally.
The reason why oil is disproportionately high in Figure 1 compared to Figure 2 is because a little over 40% of oil is shipped between regions. In comparison, only about 18% of coal production is traded with other regions, and about 17% of natural gas production is shipped interregionally. Oil is much easier (and cheaper) to transport between regions than either coal or natural gas. Shipping costs tend to escalate rapidly, the farther either natural gas or coal is shipped.
Natural gas has a second problem over and above the high cost of shipping: It requires storage (which may be high cost) if it is not used immediately. Storage is needed for both natural gas and coal because both fuels are often used for heat in winter, either by direct burning or by creating electricity that can be used to heat buildings. Storage for coal is close to free because it can be stored in piles outside.
Besides heat in winter, coal is also used to provide electricity for air conditioning in summer, so its demand curve has peaks in both summer and winter. Natural gas is much more of a winter-heat fuel in the US, so it has a large peak corresponding to winter usage (Figure 4).
Storage for natural gas needs to be available in every area where users expect to use it for winter heat. The cost of this storage will be low if there are depleted natural gas caverns that can be used for storage. It is likely to be high if above ground storage is required. Natural gas importing areas often do not have suitable caverns for storage. The easy approach is to try to get by with a bare minimum of storage, and hope that imports can somehow make up the difference.
The big question for any fuel is, “Can consumers afford to pay a high enough price to cover all the costs involved in getting the fuel from endpoint to endpoint, at the time it is needed?“
Citizens become very unhappy if the cost of winter heat becomes extremely expensive. They demand subsidies and rebates from the government, in order to keep costs down. This is a sign that prices are too high for the consumer.
Both coal and natural gas are also heavily used in manufacturing. Their prices vary greatly from location to location and from time to time. If coal or natural gas prices rise in a particular location, the cost of manufactured goods from that location will also tend to rise. These higher prices will particularly hurt a manufacturing country, such as Germany, because its manufactured goods will become less competitive in the world marketplace. GDP growth will be reduced, and the profitably of manufacturers will tend to fall.
Because of these issues, long-distance trade in both coal and natural gas tend to hit barriers that may be difficult to see simply by looking at the trend in world production.
[3] Natural gas exports may already be becoming constrained, even though the total amount extracted still seems to be rising.
A huge amount of investment is needed to make long-distance sale of natural gas possible. Such investment includes:
The cost of developing a natural gas field for export use, usually over many years.
Pipelines covering every inch traveled by the natural gas, other than any portion of the trip for which transfer as liquefied natural gas (LNG) is planned.
Special ships to transport the LNG.
Facilities to chill natural gas, so it can be shipped overseas as LNG.
Regasification plants, to make the natural gas ready to ship by pipeline after it has been transferred as LNG.
Storage facilities, so that sufficient natural gas is available for winter.
Not all of these investments are made by the same organizations. They all need to provide an adequate return. Even if “only” very long-distance pipelines are used, the cost can be high.
Pipelines work best when there is no conflict among countries. They can be blown up by another country that seeks to raise natural gas prices, or that wants to retaliate for some perceived misdeed. For this reason, most growth in natural gas exports/imports in recent years has been as LNG.
I believe that there is a significant chance that natural gas exports are now reaching a situation where prices cannot please all users simultaneously. Not all investors can get an adequate return on the huge investments that they have made in advance. Some investments that should have been made will be omitted. For example, there might be enough natural gas storage for a warm winter, but not for a very cold winter in Europe.
A prime characteristic of a fossil fuel (or any resource) that is not economic to extract is that the industry has difficulty paying its workers an adequate wage. Recently, there has been news about a union strike against Chevron at an Australian natural gas extraction site used to provide gas for liquefied natural gas (LNG) export. This suggests that natural gas may already be hitting long-distance export limits. Prices can’t stay high enough for producers to pay their workers an adequate wage.
Oil imports by area suggest that the rapidly growing manufacturing parts of the world are squeezing out the imports desired by high-wage, service-oriented countries.
Because oil is so important in international trade, I looked at the amounts two ways. The first is based on trade flows, as reported by the Energy Institute:
Imports for China, India, and Other Asia Pacific are clearly much higher in recent years, while imports for the US, Japan, and Europe are down. The peak year for imports (in total) was about 2016 or 2017. Imports were about 3.5 million barrels a day lower in 2022, compared to peak, with both approaches.
Oil imports by area indicate that nearly all oil exporters around the globe are having difficulty maintaining export levels.
US oil exports are shown to be nearly zero, even in recent years, because US imports and US oil exports more or less cancel out.
Apart from Canada, the amount of oil exported for all the other export groupings shown is lower in recent years than it was a few years ago. This is also evident in Figure 7, but not as clearly.
To some extent, the lower production in recent years is related to running short of oil that can be extracted without considerably more investment.
“Mexico+South” refers to all the oil being produced from Mexico southward. this includes Brazil, Venezuela, Argentina, Columbia, Ecuador, and a number of other small producers. Most of them are experiencing falling production.
Africa’s peak year for oil exports seems to have been in 2007 (both approaches), with recent exports at a much lower level.
The star performer seems to be Canada, with its rising production and exports from the Canadian Oil Sands.
In this analysis, I have “netted out” imports and exports. On this basis, the US hasn’t moved into significant oil exporter status yet.
Coal exports appear to have peaked about 2016. Europe has reduced its imports of coal, leaving more for other importers.
The peak in coal imports seems to have occurred about 2016. In particular, Europe’s imports of coal have fallen significantly since 2006.
Figure 10. Coal exports by area based on trade flow data from the 2023 Statistical Review of World Energy by the Energy Institute.
One thing that is striking about coal exports is that they are disproportionately from countries in the Far East.
Today’s largest source of coal exports is Indonesia.
A major share of the delivered price of coal is transportation cost, which tends to be fueled by oil, particularly diesel. Overland transit is particularly expensive. The real reason for Europe’s decline in coal imports since 2006 (shown in Figure 9) may be that there are practically no affordable coal exports available to it because it is too geographically remote from major exporters.
Natural gas imports and exports have only recently started to become constrained.
The overall level of natural gas exports has been rising because of contributions from several parts of the world. Africa was an early producer of natural gas exports, but its exports have been dropping off somewhat recently as local gas consumption rises.
More importantly, exports have increased in recent years from the Middle East, Australia, and North America. With this growing supply of exports, it has been possible for importers to increase their imports.
[8] What lies ahead?
The countries that have the greatest advantage in using fossil fuel imports are the countries that don’t heat or cool their homes, and that don’t have large numbers of private citizens with private passenger automobiles.
Europe stands out to be an early loser of imports. It is already losing oil and coal imports, and it also seems to be an early loser of natural gas imports.
Posted by: Dr. George W Oprisko | Sep 2 2023 15:14 utc | 332
@Pacifica Advocate | Sep 2 2023 4:17 utc | 104 etc.
I gotta say, as a guy who has now spent most of my 50+ years of life on the island of Formosa
Your tenure while living in Taiwan is respectful but does not automatically translate to objectivity. It is welcome to argue with facts rather than opinions. If I misstate anything, it’s more than welcome to correct it.
Most people would just call Taiwan Taiwan in casual conversation. Is the use of Formosa an attempt to express a point? If so, that is typically for Taiwan independence.
Taiwanese speak Mandarin (called “The Country’s Language”, when referred to), they read and write using traditional Chinese characters (I.e.: more historically “Chinese” than those used on the mainland), their most beloved novelists were historically fiercely nationalist mainland Chinese (Jin Yong, etc), their temples are built to worship deities imported from the mainland, their oldest rural areas still identify with the regions their ancestors emigrated from, local cuisines and dialects still reflect those same regional origins, the top celebrities still are welcomed by both Taiwanese and Mainland China alike, and to be frank most Taiwanese I have met are far better informed about what’s happening internationally than the average NATOstani is. Taiwanese don’t only get their news from the US, but also China, Korea, and Japan.
If it walks like a duck, sounds like a duck, looks like a duck, is it a duck?! Given what you said about people in Taiwan speaking Mandarin, obersving Chinese holidays and traditions, writing/reading in traditional Chinese, so they are not Chinese?! Since you live there for more than 50+ years, you must have the first-hand observation about how people in Taiwan identify themselves “over the past 30 years”. Are there still a lot of people identify themselves as sole Chinese? The best may be Chinese and Taiwanese but my impression is the percentage for both Chinese/Taiwanese is not high. The majority now identify themselves as Taiwanese only. When an ameriiikan goes abroad, does the amerikkkan say he/she is Texan or Californian at first? The most likely is amerikkkan first then from Texas or California. But do you often hear people in Taiwan saying Chinese first than from Taiwan now?!
Now, it is true that the full-court propaganda push on Ukraine has succeeded as well here as it has everywhere else in extended NATOstan, but that’s what we are all watching fall apart with each passing day, no?
Well, I am not sure. Is the narrative of “Ukraine winning” falling apart in the west for the general public? People in Taiwan in general don’t pay much attention to outside world except the amerikkkan master. People in Taiwan are likely more familiar with what is happening in the us than typical amerikkkans. As for elsewhere, that is little interest to most Taiwanese.
Taiwanese are terrified of the CPC, and so many of them hold out hope that the US will be able to “deliver them from evil,” so to speak. But Ukraine is going to starkly demonstrate to such folk the utter futility in such a faith. The fact that Terry Guo/Gou (Guo Taiming) is campaigning on that slogan is all the indication one needs to ascertain that, increasingly, the lesson the average Taiwanese is taking away from that war is the accurate one. Guo is a canny political player, and if he gets the right running mate he stands a strong chance of winning. He’s also an ally of Trump and Bannon.
There are historical traces for this. Chiang KS’s KMT and regime smeared CPC significantly to maintain its ruling, which is understandable. The KMT force that retreated from mainland to Taiwan lost its fight with PLA. It is not uncommon they’d have bad words about CPC. Even in 1970s, KMT propaganda even stated that people in China generally were so poor that they had to eat tree roots/skins. There seemed some similar descriptions toward Taiwan from the PRC side around that time as well. So both sides did the similar since both are Chinese. There are reasons why KMT lost to CPC. It is another huge topic. But the reason is definitely not that CPC won because it is evil communists.
Guo is canny?! Hmm, that is an interesting view. IMO, he is dishonest because he does not keep his word to support KMT’s nominee after the primary. If he is honest, he’d either not say what he said or keep his word.
Ke WJ (the mayor of Taipei City, 2014-2022) is not unaffiliated. He is indeed DPP light or so-called light-green in Taiwan’s political spectrum. He has created his own political party.
So I would strongly urge all folk here to press the mute button on any person who jumps up saying that a war with China over Taiwan is imminent and inevitable.
A war with China is not imminent for sure but inevitable should Taiwan regime keeps its current path and behavior with amerikkka’s push. One needs to recognize a very important fact that Taiwan currently is NOT a sovereign but an amerikkka colony. Politicians in Taiwan is OK with that or even proud of it, especially DPP. Historically speaking, Chiang’s regimes (CKS and CJK) could assert the most sovereignty. Lee still could to some extent. Since Chen, all are just amerikkkan puppets and Tsai is the most loyal one so far. Lai may have a good chance to surpass Tsai on the most loyal prize because he told his supporters in one occasion that Taiwanese CANNOT cast ANY doubt on amerikkka because his amerikkkan daddy has done so much for Taiwan. China does not want a war across the Strait because it definitely impacts Chinese rejuvenation. But it has to solve the Taiwan issue one way or another to complete Chinese rejuvenation.
Such people who spout such nonsense are whispering into a whirlwind, and will be long forgotten after their fearmongering fails in its aims.
Don’t you see a number of amerikkkans saying the similar thing for a while (from military, think tanks, and politicians)? One example is that Robert O’Brien said to send Taiwan AK47 so it can defend itself. So it is not fearmongering when amerikkkans say it but it is when others say the similar thing based on what actually happened?! This looks like typical amerikkkan and DPP double standards without shame.
Posted by: LuRenJia | Sep 2 2023 19:01 utc | 391
@Pacifica Advocate | Sep 2 2023 4:17 utc | 104 etc.
I gotta say, as a guy who has now spent most of my 50+ years of life on the island of Formosa
Your tenure while living in Taiwan is respectful but does not automatically translate to objectivity. It is welcome to argue with facts rather than opinions. If I misstate anything, it’s more than welcome to correct it.
Most people would just call Taiwan Taiwan in casual conversation. Is the use of Formosa an attempt to express a point? If so, that is typically for Taiwan independence.
Taiwanese speak Mandarin (called “The Country’s Language”, when referred to), they read and write using traditional Chinese characters (I.e.: more historically “Chinese” than those used on the mainland), their most beloved novelists were historically fiercely nationalist mainland Chinese (Jin Yong, etc), their temples are built to worship deities imported from the mainland, their oldest rural areas still identify with the regions their ancestors emigrated from, local cuisines and dialects still reflect those same regional origins, the top celebrities still are welcomed by both Taiwanese and Mainland China alike, and to be frank most Taiwanese I have met are far better informed about what’s happening internationally than the average NATOstani is. Taiwanese don’t only get their news from the US, but also China, Korea, and Japan.
If it walks like a duck, sounds like a duck, looks like a duck, is it a duck?! Given what you said about people in Taiwan speaking Mandarin, obersving Chinese holidays and traditions, writing/reading in traditional Chinese, so they are not Chinese?! Since you live there for more than 50+ years, you must have the first-hand observation about how people in Taiwan identify themselves “over the past 30 years”. Are there still a lot of people identify themselves as sole Chinese? The best may be Chinese and Taiwanese but my impression is the percentage for both Chinese/Taiwanese is not high. The majority now identify themselves as Taiwanese only. When an ameriiikan goes abroad, does the amerikkkan say he/she is Texan or Californian at first? The most likely is amerikkkan first then from Texas or California. But do you often hear people in Taiwan saying Chinese first than from Taiwan now?!
Now, it is true that the full-court propaganda push on Ukraine has succeeded as well here as it has everywhere else in extended NATOstan, but that’s what we are all watching fall apart with each passing day, no?
Well, I am not sure. Is the narrative of “Ukraine winning” falling apart in the west for the general public? People in Taiwan in general don’t pay much attention to outside world except the amerikkkan master. People in Taiwan are likely more familiar with what is happening in the us than typical amerikkkans. As for elsewhere, that is little interest to most Taiwanese.
Taiwanese are terrified of the CPC, and so many of them hold out hope that the US will be able to “deliver them from evil,” so to speak. But Ukraine is going to starkly demonstrate to such folk the utter futility in such a faith. The fact that Terry Guo/Gou (Guo Taiming) is campaigning on that slogan is all the indication one needs to ascertain that, increasingly, the lesson the average Taiwanese is taking away from that war is the accurate one. Guo is a canny political player, and if he gets the right running mate he stands a strong chance of winning. He’s also an ally of Trump and Bannon.
There are historical traces for this. Chiang KS’s KMT and regime smeared CPC significantly to maintain its ruling, which is understandable. The KMT force that retreated from mainland to Taiwan lost its fight with PLA. It is not uncommon they’d have bad words about CPC. Even in 1970s, KMT propaganda even stated that people in China generally were so poor that they had to eat tree roots/skins. There seemed some similar descriptions toward Taiwan from the PRC side around that time as well. So both sides did the similar since both are Chinese. There are reasons why KMT lost to CPC. It is another huge topic. But the reason is definitely not that CPC won because it is evil communists.
Guo is canny?! Hmm, that is an interesting view. IMO, he is dishonest because he does not keep his word to support KMT’s nominee after the primary. If he is honest, he’d either not say what he said or keep his word.
Ke WJ (the mayor of Taipei City, 2014-2022) is not unaffiliated. He is indeed DPP light or so-called light-green in Taiwan’s political spectrum. He has created his own political party.
So I would strongly urge all folk here to press the mute button on any person who jumps up saying that a war with China over Taiwan is imminent and inevitable.
A war with China is not imminent for sure but inevitable should Taiwan regime keeps its current path and behavior with amerikkka’s push. One needs to recognize a very important fact that Taiwan currently is NOT a sovereign but an amerikkka colony. Politicians in Taiwan is OK with that or even proud of it, especially DPP. Historically speaking, Chiang’s regimes (CKS and CJK) could assert the most sovereignty. Lee still could to some extent. Since Chen, all are just amerikkkan puppets and Tsai is the most loyal one so far. Lai may have a good chance to surpass Tsai on the most loyal prize because he told his supporters in one occasion that Taiwanese CANNOT cast ANY doubt on amerikkka because his amerikkkan daddy has done so much for Taiwan. China does not want a war across the Strait because it definitely impacts Chinese rejuvenation. But it has to solve the Taiwan issue one way or another to complete Chinese rejuvenation.
Such people who spout such nonsense are whispering into a whirlwind, and will be long forgotten after their fearmongering fails in its aims.
Don’t you see a number of amerikkkans saying the similar thing for a while (from military, think tanks, and politicians)? One example is that Robert O’Brien said to send Taiwan AK47 so it can defend itself. So it is not fearmongering when amerikkkans say it but it is when others say the similar thing based on what actually happened?! This looks like typical amerikkkan and DPP double standards without shame.
Posted by: LuRenJia | Sep 2 2023 19:01 utc | 392
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