Fueling the Rising Sun: Asia's Energy Needs and Global Security

By Calder, Kent E. | Harvard International Review, Summer 1997 | Go to article overview

Fueling the Rising Sun: Asia's Energy Needs and Global Security


Calder, Kent E., Harvard International Review


Kent E. Calder is Director of the Princeton University Program on US-Japan Relations and Special Advisor to the US Ambassador to Japan.

Global energy markets stand amidst quiet, steady, and historic transformation. Traditionally, most of the fuel supplied by these markets has gone to Western consumers, whose appetite for imports has been relatively static for the past decade. East Asia, however, is rapidly emerging as a major claimant in global energy markets, especially in the market for oil. Indeed, between today and 2010, East Asian economies will experience a larger increase in oil demand than all those of the Organization for Economic Cooperation and Development (OECD) combined. The impact of an extra 10 million barrels per day (mmbd) of new East Asian oil demand on finely balanced world markets will doubtless be substantial and will have complex implications for international security--both in East Asia and in the world as a whole.

A fundamental reality of East Asia's energy situation is the substantial and increasing gap between production potential and consumption in the major nations of the region. This resource gap is most pronounced in Northeast Asia. Japan, whose gross national product (GNP) is well over 15 percent of the global total, has no significant domestic oil or gas fields. Indeed, it imports 99 percent of its oil, amounting to more than 5.7 mmbd. North Korea, South Korea, and Taiwan are in similarly vulnerable circumstances.

China, in contrast to the Northeast Asian periphery, has massive domestic energy resources, including the largest coal reserves on earth. Yet infrastructural, environmental, technical, and financial difficulties combine to sharply complicate the exploitation of those resources. Energy demand in China is growing explosively along the southern and eastern coasts, particularly in Guangdong, Fujian, and the Shanghai area. Yet oil, coal, and hydroelectric reserves are concentrated in the North and West. China's aging, decrepit railroads and pipelines are grossly inadequate to deliver energy across China to meet rapidly rising demand along the coast. In addition, the prospectively major oil reserves in Xinjiang and possibly offshore are difficult to extract, particularly in the absence of sophisticated foreign technology.

Indonesia, Malaysia, and Vietnam have recently been significant energy exporters to other parts of Asia. Yet surging domestic consumer demand, intensified by political pressure to keep gasoline prices and electric-power rates low, is limiting their potential to alleviate broader Asian regional energy shortages. Indonesia, long the largest oil exporter of the region, appears likely to become a net oil importer between 2000 and 2005.

Thirsty Tigers

Asia's energy situation--already precarious due to underlying resource insecurities in Northeast Asia--is being sharply complicated by explosive economic growth. Japanese growth, to be sure, remains stagnant. Yet Asian economies outside Japan averaged 7.9 percent real GNP growth in 1995, with China growing at 10.2 percent, Malaysia at 9.5 percent, South Korea at 9 percent, and Thailand at 8.7 percent. These figures reflect a pattern of East Asian vitality that has persisted for nearly a generation, a pattern that shows no sign of changing.

The adverse energy implications of Asia's rapid, sustained growth are compounded by three aggravating factors: the energy-intensive structure of Asian industry, a consumer revolution stirring explosive demand for automobiles and appliances, and energy-inefficient practices in many nations of the region. Petrochemicals, shipbuilding, and steel, for example, are high-growth sectors in nations like South Korea and China, and all these industries make intensive use of energy. The automobile revolution is precipitating heavy gasoline demand, demand which is rising at over 20 percent annually in nations such as South Korea and Thailand. …

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