China may disagree with the International Energy Agency’s declaration that it has become the world’s largest energy user, but what is much more relevant is the fact that without China’s growing appetite for energy, oil prices would be much lower – particularly since we are still in the midst of a global economic recovery.

Despite what some environmentalists may say, being the globe’s biggest consumer of energy is a badge that can be warn with pride. Yes, the United States was criticized for using 25% of the world’s energy with only 5% of the population, but that consumption helped drive global economic wealth virtually everywhere.

“The truth is that our leadership in energy consumption reflected our leadership as a global economic growth engine that fed the world,” Phil Flynn of PFGBEST writes.

He points out that the United States showed leadership in energy efficiency by getting better GDP per barrel back on investment than almost anyone else.

“The U.S. was not consuming too much, the problem was that other countries were consuming and producing too little,” Mr. Flynn says. “Now China has assumed its rightful place as the world’s top energy [consumer] after decades of playing catch up and decades now of a strong upward growth trend.”

Despite this noble achievement, shouldn’t they be consuming even more?

The IEA estimates that China consumed the equivalent of 2,252 million metric tonnes of oil in 2009. That’s 0.4% more than the 2,169 million tonnes used in the United States, which was surpassed for the first time. China’s National Bureau of Statistics reported a figured of 2,132 million tonnes in February.

“The IEA’s data on China’s energy use is unreliable,” Zhou Xi’an, an official with the National Energy Administration, was quoted by Xinhua News Agency at a press conference (Note the energy saving-friendly photo).

He said the IEA still lacked understanding about China’s “relentless efforts” to cut energy use and emissions, notably the country’s aggressive expansion of new energy development.

The IEA also credited China for reducing the energy intensity of its economy. “It has also very quickly become one of the world’s leaders in renewable energy, particularly wind power and solar energy, and paved the way for a big expansion of nuclear power,” the agency said.

It is worth noting that U.S. oil demand is still 20% below its all-time high, according to Pierre Lapointe, global macro strategist at Brockhouse Cooper.

“While China seems reluctant to become the world’s top energy consumer, it is now the most important player on the demand side of the energy equation,” Mr. Lapointe said in a report.

He pointed out that while world oil supply recently climbed to 86.2 million barrels per day (500,000 less than the all-time high of 86.7 million barrels per day registered in July 2008), the increase in supply was partially offset by a 61% increase in Chinese oil imports during the period.

“The additional demand from China will continue to support oil prices in coming years,” Mr. Lapointe said, reiterating an Overweight recommendation on energy producing countries, particularly Canada and Norway.

China’s energy demand has doubled since 2000, but it remains roughly one-third of the OECD average on a per capita basis, according to the IEA. This fact, coupled with China’s 1.3 billion population, suggests strong growth ahead.

Jonathan Ratner