First posted to the China Resurgent Forum on Oct. 19, 2004 at the following link:
http://www.network54.com/Forum/thread?forumid=238054&messageid=1098185898&lp=1098185898
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Oil price has reached $55 per barrel and the Chinese government isn¡¯t even talking about fuel cell and hydrogen.
If the Chinese people consumed oil on the same per capita basis as the Americans, then China would need some 90 million barrels of oil a day. This means if the CCP government is going to provide the Chinese people the same or higher standard of living than the Americans, then it must find enough oil equivalence to run China¡¯s hundreds of millions of cars and feed stock for China¡¯s chemical industries to replace some 90 million barrels of oil a day. Unfortunately, the CCP government is clueless about how to do this. It is still acting like a stupid guinea pig running faster on the treadmill looking for more oil both at home and abroad.
There are many reasons why China cannot continue to use oil. The first is simply the lack of oil in China. The proven reserve of China is somewhere around 25 and 30 billion barrels. Let¡¯s say China has 100 billion barrels of oil that could ultimately be recovered. But as pointed out above, China needs some 90 million barrels of oil a day. This translates to more than 30 billion barrels of oil a year. Even if granted China has a total reserve of 100 billion barrels of oil, it would not last much more than 3 years when China is consuming oil at the same current per capita rate as America. Even with greater efficiency, China could not use much less oil than America and still allow the Chinese people to maintain a high standard of living comparable to that of Americans.
If China had no alternative fuel to replace oil then the obvious thing for China to do is to import the extra oil. But could China import some 20 billion barrels of oil a year at more than $50 per barrel? At $50 per barrel 20 billion barrels will cost $1 trillion. China¡¯s current forex surplus is less than $50 billion a year. This means China will need to export some $950 billion more per year to earn the extra forex to pay for the extra oil it will need. I think anybody in his right mind will say this is impossible. This means that China cannot on a long term basis continue to use oil and must phase out anything and everything to do with oil.
The above reason alone is enough to show that China could not depend on oil. But there are also other compelling reasons why China should not use oil even if China could produce oil domestically in unlimited amount. The use of oil has created unacceptable pollution that is causing serious harm to the health of the Chinese people which in turn causes economic losses through increased medical services and lost work. In my post at the following link:
http://www.network54.com/Forum/thread?forumid=238054&messageid=1092630321&lp=1092630321
I had made the following quote:
¡°It was pointed out in the above mentioned article that losses due to air pollution every year since 1970 amounted to as much as 8% of China¡¯s GDP. Since China¡¯s annual rate of GDP growth since 1970 has been around 9% it means that losses due to air pollution has kept China from growing significantly. It is obvious therefore that China should not continue to use coal as its energy source but should immediately shift to some other clean source of energy.¡±
Therefore, China could not use any fossil fuel such as coal or oil without causing serious air pollution that would require unacceptably high economic cost to rectify. And there is simply no amount of compensation for a life cut short.
Some people argue that natural gas is free of pollutants which makes it a clean fuel. To some extent this may be true. But natural gas also gives off CO2 when burned thus contributing to global warming which is already increasing the sea level by at least 2 mm per year and in some areas even higher. Therefore, natural gas is not acceptable as fuel.
Everything considered, the only alternative that is viable is the use of hydrogen to power fuel cell vehicles. As I¡¯ve posted on several threads in the China Resurgent Forum fuel cell technology is already well proven and the cost is rapidly coming down at a rate where it can be competitive by 2010. In its operation fuel cell uses nothing but hydrogen and produces nothing but water. If the hydrogen is made from the electrolysis of water using electricity generated by nuclear power plants then there is no emission of any kind of undesirable gases at any stage in the hydrogen/fuel cell/nuclear power system.
It has been estimated that with oil price going above $40 per barrel it would be cost effective to use hydrogen/fuel cell instead of gasoline. Now oil price is going near $60 per barrel. It is obvious that the price of oil is not likely to come down over the long term as the world demand for oil will only increase in the coming years and decades as more of the world¡¯s developing countries rise in their standard of living. It isn¡¯t farfetched to speculate about $100 per barrel of oil. Given this prospect it is not only possible for fuel cell cars to be cheaper to operate than gasoline car, it is the only way to operate any car.
But unfortunately, the CCP government is still stupidly running along the old rut and trying to solve this potentially disastrous problem by looking to expand the production of China¡¯s domestic oil reserve, seeking more foreign sources of oil, and trying to make oil consumption more efficient. In the final analysis this program will only lead to the following problems:
1. Increasing oil consumption will only increase air pollution and global warming.
2. Relying on foreign sources of oil will only lead to foreign wars.
3. Air pollution and global warming will lead to economic losses that has been estimated to have cost China some 8% of GDP per year since 1970.
4. China will bankrupt its economy paying for foreign oil and allow oil sheiks to buy out Chinese economy.
Therefore, China could not afford to buy the oil from foreign countries. Even if China could find the trillion dollar plus forex each year to pay for the foreign oil, it would still cause a serious strain on China¡¯s economy and in the end it would cause serious economic losses through air pollution, global warming and health hazard to the Chinese people. And China would be embroiled in unceasing wars to protect its sources of foreign oil and sea lanes.
But by going to hydrogen/fuel cell system China would immediately made itself totally energy self-sufficient. The air would be pure and the health of the Chinese people undamaged. The sea level would not rise any faster than naturally and hopefully a solution could be found to protect the coastal areas given enough time and scientific advancements.
China has an advantage now over other developed countries in that China¡¯s car system is still at a very small number thus allowing it to implement any new system without excessive losses to the old system. If the CCP government did not take this opportunity to shift to the hydrogen/fuel cell/nuclear power system now, it will find it increasingly difficult and costly later on as more people would suffer losses in the shift from the gasoline system to the hydrogen/fuel cell system. It is obvious that those who stand to suffer will fight to prevent the shift thus causing serious social turmoil.
The need to implement a plan to shift to the hydrogen/fuel cell system is clear and must start now. It is likely that fuel cell technology would be cheap enough to compete against gasoline engine cars by 2010. With the price of oil going above $55 per barrel, it is obvious that hydrogen would be much cheaper than gasoline even now where the breakeven point is set at $40 per barrel of oil. In other words, above $40 per barrel of oil, it is cheaper to produce an equivalent amount of hydrogen to operate a car over the same distance.
Given this glaringly obvious need to go to the hydrogen/fuel cell cars, it is infuriating to hear the CCP government talking foolishly about expanding China¡¯s oil exploration domestically while making new contracts for joint foreign oil explorations. Such stupid policy will inevitably lead to serious consequences that will impede China¡¯s economic progress while embroiling China is foreign wars. I hope perceptive people will condemn this foolish policy and help promote the hydrogen/fuel cell/nuclear power technology that China needs for national independence and rapid economic advancement that will allow China to quickly become the strongest and most prosperous nation on earth.
To read an article in peopledaily.com.cn on what Wang Tao, senior vice president of the World Petroleum Congress (WPC) and chairman of the Chinese National Committee for WPC had said about China¡¯s solution for coping with the oil problem at the WPC 1st Youth Forum on Monday in Beijing, please go to the following link:
http://english.peopledaily.com.cn/200410/19/eng20041019_160640.html
Wang Tao is the head of an institution involved with oil. As such his solution for the oil problem of China can be expected to be in terms of increasing China¡¯s domestic oil exploration and production while expanding China¡¯s co-operation with foreign governments to explore, produce, and export oil to China.
China¡¯s oil import for the first 8 months of 2004 has been reported to be some 76 million tons which at 7.3 barrels per ton translates to some 555 million barrels. Extrapolating this, China will probably need to import some 832 million barrels of oil for the entire 2004. If the average cost per barrel is $40, then China will need to pay some $33.3 billion for oil import of 2004. With increasing demand for oil and increasing price per barrel, China will soon squander all its hard earned foreign exchange. I hope the Chinese people will understand that continuing to use oil is simply no solution even if China could import all the oil it needs.
