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ISSUES....
Inside, confidential and off the recordCck-p talk
AN ITEM FOR A LULL IN CONVERSATION REGARDING CHINA: We in the US hear talk at cocktail parties all the time about the dependence of the country upon foreign sources of energy, and we find those conversations comical given the real source of energy here. Firstly, when we do hear those conversations, we try to steer clear of them for there is usually nothing to gain from entering the fray, for the liberals in the crowd always yell the loudest and always say the silliest things, drowning out reason and fact along the way. But when we “endeavor to persevere,” as the Chief Dan George said in his great role in “The Outlaw Josey Wales,” and chose to add what modest insight we can to the conversation, we note firstly that the US is itself its greatest supplier of energy, dwarfing all other suppliers. This is always met with incredulity, but it is indeed fact.
Then, when we tell those listening that the question they really think they are hearing is “Which nation supplies the US with the largest share of ‘imported’
crude?” and heads nod in agreement that that is indeed the question they want answered, we respond “Canada… by a large margin,” we are met with even greater incredulity. Then when we tell them that the US is every year less and less reliant upon Middle Eastern crude oil, and that what we import from Canada, Nigeria, Venezuela and Mexico absolutely dwarfs that which we import from the entire Middle East and that we get practically zero barrels of oil from Iraq stunned silence always ensues.
But it is China that is the nation in real difficulty, for China is materially dependent upon foreign sources of fuel to supply its energy. For example, when discussing China’s electricity generating capacity, we note that only two years ago… the latest year for which definitive figures are available… China produced approximately 83% of its electricity from fossil fuels; 14% from hydropower; 2.0% from nuclear power plants and 1.0% from wind, biomass and solar energy.
For the US, using rather dated data from the EIA, just a bit more than 70% of our electricity was generated by fossil fuels; 7% was generated by hydropower;
20% was generated by nuclear power plants, and the remainder was generated from “renewable.” And since then, the reliance upon nuclear power has risen and the reliance upon fossil fuels has fallen… marginally of course, but importantly. So who is at risk here and who is the most vulnerable to supply problems regarding fossil fuels? It is not the US; it is China… and their problems are only going to get worse; hence China’s intense hunt for crude supplies in Africa, in the Middle East and off its own shore. It has no choice.
- Dennis Gartman/ The Gartman Letter 11/ 10 / 09
- For more on interesting comments, you can subscribe to The Gartman Letter by contacting Dennis Garthman: Phone - Fax: or email : dennis@thegartmanletter
ISSUES.... 11/10/09
ISSUES.... Inside, confidential and off the record
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