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In particular, the NDRC and the Ministry of Land and Resources have been engaged in an ongoing dispute over whether shale can be classified as a mineral or as an energy resource. This above-ground impediment to shale production is an indictment of the federal ownership of minerals. It demonstrates how the ambiguity of Chinese regulatory authority prevents market forces from operating efficiently and therefore imposes ballooning cost uncertainties (Sandalow et al. 2014). Based on output from the 18th Third Plenum, China has indicated that it is in the process of converting more extensive property rights to rural farm owners; however, the country is thus far unwilling to relinquich full mineral rights to its civilians.

The emergence of large shale oil and gas deposits is altering worldwide energy markets in many ways:

  1. It undermines the position of Russia and Mideast as major suppliers of hydrocarbons.
  2. It weakens the worldwide market for biofuels made from sugar, corn, palm oil and wheat. In 2010 world biofuel production decreased for the first time in ten years.
  3. It undermines the case for nuclear power, already shaky after the Tsunami and melt-down at Fushysshima in March 2011, and the subsequent German government decision to forego all nuclear power by 2025. (China, however, was making massive investments in nuclear power in the years 2010-2015).

Another important change that began in the latter years of the 20 th century has been growing importance of national oil companies in emerging nations.

National oil companies in emerging nations in 2010 controlled nearly 90% of oil reserves in the world. All of the NOCs are state owned enterprises (SOEs), and some of them are among the biggest in the world: ARAMCO/CNOC/PETROBRAS/PEMEX. Being SOEs, they exhibit many of the problems of SOEs, especially X-inefficiency (failure to minimize costs) and corruption (see Chapter___).

Another significant change in the worldwide picture has been the very rapid growth of oil consumption in most emerging nations. Their market share in total global oil consumption has increased notably since 1996 from 33% in 1966 to 37% in 2009.

Finally, on the production side, the Chinese presence in overseas oil and gas sectors in emerging nations has been growing rapidly, especially in Africa. China by 2015 obtained more than 1/3 of its oil from Africa.

The energy resource coal is discussed only briefly in this Chapter. Coal production is still sizeable in a few emerging nations, including China, Colombia and India. And utilization of coal remains in 2015 an important fuel in electric power generation, especially in large emerging nations including China and India. However, the relative reliance on coal as a fuel is slowly but steadily declining in relative importance, especially owing to cheaper natural gas and gradual but promising increases in capacities for wind and solar power generation. But the principal reason for longer term declines in coal’s share in power generation is the significantly greater emission of CO 2 from use of this resource. It is a safe bet that both the absolute number of coal mines and the number of coal-fired power stations will diminish.

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Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
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