China, Big Oil, and George W

The New York Times says a big issue between Bush and China’s President Hu will be China’s use of the world’s energy resources – and how China is “tying up” oil with long-term contracts. If it turns out that Bush is in fact concerned about this, he’s even dumber than I had feared. For one thing, as you probably know, the United States uses up almost a quarter of the world’s energy with about 5 percent of the world’s population. China is way, way behind us, and constitues one out of every 6 people on the planet. So we have some nerve suggesting to China it’s consuming too much energy. As to the long-term supply contracts, that’s only economically sensible. It’s what BP, Conoco, Exxon-Mobile and all the other major oil companies do when they try to lock up supplies at the best rate they can. China still has to deal with a world oil market. “Locking up” some of it only means making a bet that a long-term supply contract at a certain price will ultimately pay off because world oil prices will rise higher than the contract price. Why are we so quick to blame China for acting rationally? Why are we so slow to blame Exxon-Mobile and the other big oil companies for failing to invest in new oil exploration and instead using their giant profits these days to buy back their stock (and thus push it upward even higher), and pay their executives absurd sums of money (Exxon-Mobile just awarded its departing CEO with a nice pay package of some $300 million). I’d like to hear Bush talk about the irresponsibilities of Big Oil. I will not hold my breath.