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The Invisible Chinese Energy Godzilla in the USA

Updated on March 6, 2012
Coal smog from China plants
Coal smog from China plants
Wind energy
Wind energy

China is a huge beast and it is hungry now and forever. China does have some of its requirements yet not the know-how nor technology to obtain it. They have tons of money since China, despite how they appear from the outside, is the last Communist nation. Communism is an old word born around since 1918, aka as Bolshevism, during the Russian Civil War 1917, when Lenin and Marx created it. One of their theories was that the communists would milk the West for its technology, know-how, during the "friendly" years and then when it was over, conquer them. Well, for Russia, it did not work out well as the communist nation collapsed in 1991. Hey, China is still here and growing all the time.

Their doors are wide open for all of the West's commerce, trade, skills, technology,, know-how. Why? They are playing catch-up. It was only as late as 1985-90, China was quite the opposite it is today, steeped in its Maoist communist party. But they learned. They learned and adapted. Many of their top communist leaders went to school in America to learn from the expert-America. China is emulating America with a communist twist.

China bought much of the USA debt. That matters. Now, China is eyeing America's energy, When they find an energy company they want, they do not outright buy it-that sort of thing creates a huge red flag in the public's eyes and government. Now, they infiltrate by buying a minority stake in the company, only apply passive roles in management, and refrain from being overly eager to obtain technologies. This makes the Chinese presence nearly invisible to the average worker who thinks it is an American company. Two huge Chinese companies are now buying American, Cnooc (China National Offshore Oil) and China Petrochemical (Sinopec). The chairman of Sinopec is a high ranking communist party member who went to college at USC in the 1980's.

In Canada and the US, these companies have spent $6 billion in obtaining energy producing companies, $5 billion in South America. When combined, they are the most valuable than all other areas of the world for energy to China. These new deals provide the Chinese new markets, new technology and management techniques that they can take home and apply in the homeland. Is this milking the West?

China, since 2009, has been the world's hungriest for energy consumption. It is almost the highest consumer of oil and natural gas consumption has doubled in just four years. In 2009, China bought 60% of Canada's oil sand projects for $2 billion, then bought 9% of Alberta Syncrude, Canada's largest. In 2010, China paid $1 billion for 600,000 acres of the Texas vast oil shale fields called Eagle Ford. Then, two similar deals were secured in Wyoming and Colorado. They provided financing to Statoil, a Norwegian company in the Gulf of Mexico. Then, China paid $2.5 billion to Devon Energy in Oklahoma City for a 33% holding in their 1.3 million acres of drilling located in Ohio, Michigan.

You won't find many, if any, Chinese at any of these sites, unlike those in the Sudan, where legions of Chinese work, the Chinese are only in the background and seldom deal with daily activities leaving control and operations to Americans, who know what they are doing. What the Chinese get is the technology and know-how so they can start mining and producing from its 1,275 trillion feet of gas that is untapped (this more than than in both Canada and US).

Maybe all this is just business. They buy a stake in a company, the money allows the company to continue, China reaps sources of energy and new technology used within the company. Seems like a win-win. But, what happens if China and the US challenge one another in areas of the world important to both?

China could do dramatic damage to the US economy without any military action.


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