Oil and water, yin and yang, and here in the desert, the old story of oil being the new gold continues to play out. Oil has been a dominant factor in the global economy and financial markets since the Great Depression when US oil production plummeted and Europe became dependent on increasingly expensive imported oil. To sustain the industrial empire of its 19th-century predecessor, the British Empire, the US has been a major source of ever more oil, even as US oil production has slumped. Now that US shale oil production is driving down energy costs and adding to global economic growth, the US is once again the new world oil king. The next chapter in this history will be written by China and other petro nations as they begin developing vast energy reserves. Energy is more important than ever to a fast-growing China. In the last 30 years, China's energy use has risen seven times, energy intensity by four times, oil consumption by five times, and coal consumption by nine times. To sustain the growth of industry and agriculture, China will continue to use more oil, as more than 50 percent of the country's electricity is generated by burning fuel oil. But China is determined not to be dependent on other nations for the fossil fuels it needs. It will build oil refineries and gas-processing facilities on its own soil to control its own energy supplies. Already the world's second-largest energy producer behind only the US, China is making a break for the top spot. According to BP's 2012 Statistical Review of World Energy, China surpassed the US as the world's largest oil producer in 2011, extracting 13.6 million barrels a day, up from 12.2 million in 2010. The biggest reserves in China are found in East and West Xinjiang, in the Tarim Basin, and in the eastern region of Bohai in North China. It is the Chinese who discovered oil and gas off the coast of Africa in recent decades, discovering new reserves off the African nation of Gabon, Congo, and Equatorial Guinea. It is also Chinese companies who have discovered oil in the East China Sea, putting them on a collision course with Japan. In a race to become the world's largest energy producer, China has a lot to learn from the past. China has tried to keep its oil supplies from foreign rivals by creating barriers to imports. This is what the US tried to do in the 1890s by forming the Rocky Mountain Oil and Gas Association to keep oil out of British companies. In the 1910s, Britain built a series of pipelines across Canada and the Caribbean and to the Mediterranean to keep foreign rivals from moving onto British-owned land. This is also what Nazi Germany tried to do in the 1930s when it created its own cartel, the Interessengemeinschaft des Erdölexporteurs ("Interest Community of Oil Exporters"). What is ironic in China's "petrol diplomacy" is that it's oil fields are all off limits to foreigners. In part, this is because the Chinese have used their control of the international oil supply to drive up oil prices and drive out foreign oil companies. As US oil production declined from the 1970s, the big oil companies gave up exploration in marginal fields and looked elsewhere to meet their growth requirements. So they began to invest in large offshore projects in places such as Brazil, Angola, Nigeria, Gabon, and other countries in the Western Hemisphere. They discovered large fields off of Angola and in the Gulf of Guinea that could provide large volumes of oil for decades. With the discovery of these new huge oil fields, the oil majors shifted their attention away from onshore exploration in places such as the US, Canada, Mexico, and West Africa and began to develop offshore projects that could supply them with ever-greater quantities of oil over the long term. China has tried to keep its oil supplies from foreign rivals by building barriers to imports. It has done this by limiting access to state-owned companies to offshore acreage and by setting terms on oil contracts in ways that keep its own oil companies in a controlling position. For this reason, the Chinese are determined to secure control of their own oil fields by buying companies around the world that operate in the Western Hemisphere. By creating this "oil wall," China also creates a global shortage of oil. In many cases, the Chinese are now buying existing oil fields, pipelines, and refineries, as well as the companies that produce the oil. But it has been impossible to keep out foreign investors completely. In 2007, ExxonMobil was permitted to sell gas to China. In 2009, the Chinese were given the first overseas rights to natural gas fields in Libya. The deals are done by sovereign wealth funds. Many of these investments have been secured by Chinese companies without the full support of the Chinese government. Chinese government officials want to attract as much investment as possible, even if they are not always able to control how the funds are used. Oil money has been used to build the necessary infrastructure in China. But some of the most important work is being done in foreign fields. China recently secured its first deal for oil production in Angola. It is part of the Chinese strategy to reduce oil imports by developing projects outside the US, a technique the US uses in East Africa, the Middle East, and Latin America to keep supplies away from competitors. China's major oil interests are offshore, not onshore. It should come as no surprise that one of the richest deposits of oil in the world is discovered at Ghawar in Saudi Arabia. The Ghawar oil field sits directly in the middle of what might be called China's empire in the Arab World. And though the US has a stake in the fields, China wants to seize control of the field from the Saudis. It has secured financing and set up a partnership with its National Petroleum Corp. to take over the oil fields and establish China as an oil producer. If China is successful in acquiring Saudi Arabia's oil, it will give the country leverage against the US as the world's two largest oil producers. The China National Offshore Oil Corp. (CNOOC) has become the fifth-largest oil company in the world, controlling a staggering 40 percent of the world's oil reserves and making it the number one investor in the US oil industry. In 2010, CNOOC bought the Sinopec-led consortium of offshore oil exploration and development that had been building a new deepwater platform in the Gulf of Mexico. At a cost of $7 billion, the US fields in the Gulf of Mexico and along the gulf coast were a strategic move in China's quest to secure access to America's and Europe's vast oil reserves. As if that wasn't enough, in 2013 the China National Offshore Oil Corporation purchased US-based GeoStar Oil and Gas. The company was renamed CNOOC Nexen and acquired an additional 5.5 million barrels of oil in the deal. All the companies being acquired by CNOOC are in the North American or European markets. The US oil industry's largest foreign investor is CNOOC. CNOOC is the largest foreign investor in American oil with $12 billion in investments, followed by PetroChina with $7 billion and Saudi Arabia's largest oil company, Aramco with $5 billion. CNOOC is the largest foreign oil investor in Iraq and is making a major play for Iranian oil, one of the largest in the world. The Chinese oil industry is in the midst of a boom. Chinese investors are making other big deals in Africa, Europe, Latin America, and the Middle East. China has acquired stakes in nearly every major oil company operating outside China. For example, China Oil, the state-owned China National Offshore Oil Corporation, has purchased stakes in the largest foreign oil companies in Norway and Algeria, and in Brazil, Venezuela, and elsewhere. In fact, the United Kingdom recently became the center of the global oil field wars after two Chinese oil companies won big oil deals in Brazil, an ongoing dispute with Venezuela, and the purchase of most of Britain's North Sea oil fields. In the last five years, China has begun to acquire large parcels of land and offshore oil fields in places such as Africa, Pakistan, Venezuela, Brazil, and the Middle East. Through its involvement with the US oil industry, and by acquiring equity stakes in its oil fields, China is positioning itself to take over the world's oil. The Chinese have begun to acquire large parcels of land in Libya. They are buying huge oil fields along with offshore oil production facilities. It is no coincidence that Libya's oil reserves are estimated to be five times as large as those of Saudi Arabia. Libya also has the largest oil refinery in the entire Mediterranean region and can produce 25 million barrels of oil per day. In the last few years, the Chinese have acquired huge gas fields in places such as Brazil and Russia. They are the third-largest buyer of natural gas globally. According to some estimates, China now has the largest reserves of natural gas in the world, behind Russia and the United States. It is likely that the US will lose its position as number one. In any case, it has become much less dependent on oil from the Middle East and the Persian Gulf for the energy supplies. The growing dependence of the world economy on natural gas is important because natural gas is often the fuel of choice for fuel-efficient industrial countries. Brazil, Saudi Arabia, the United Arab Emirates, and Qatar use more gas to generate electricity than any other region in the world. In Brazil, gas is a primary source of energy for the transportation sector, and Saudi Arabia is moving away from oil to electricity.