Is it rational to fear resource war with China a decade or two down the road, when it surpasses the size of the U.S. economy, its appetites surge for metals, elements and energy, and its blue-water navy has grown in capability to secure large swaths of distant sea?

Yes, if you embrace the mainstream conviction that the pace of Chinese growth and call on finite resources are incompatible with consumption patterns in the U.S. and Europe. Under this scenario, the West and China are on a collision course: Starting in the next decade, one or the other must either begin to adapt to much-shrunken expectations, invent an entirely new set of fundamental fuels and high-tech building materials, or simply put up their dukes and fight it out.

But what if a new strain of thinking is correct, and we are entering a world not of fossil fuel scarcity, but of a surprising abundance of oil? The spreaders of this new narrative are tallying up production projections in a slew of new and long-known oil patches around the world -- Canada's oil sands; U.S. shale oil and deepwater Gulf of Mexico; deepwater Brazil; the Equatorial Margin of eastern South America; deepwater Angola; offshore Kenya; the Russian Arctic; and elsewhere (such as the Canary Island, pictured above).

They are suggesting by implication that, if all that pans out, the West and China will not be on the path of a smashup; rather, they will be having a much different conversation, which would center on a question of choice:

Until now, the push for clean-tech has been partly driven by a belief that oil is running out -- we had to develop new sources of energy, and fast, or go back to the forest. Now that there was no impending age of darkness, the U.S., China and others would have to decide on its merits -- do they want a cleaner world, one that is not heating up inexorably and sending seawater over the major cities and swallowing up island nations?

The reason they would have to hold such a conversation is that the corollary of this narrative is a wholesale swamping of clean-tech -- oil prices would probably drop so low as to eliminate the competitive economics of virtually any alternative energy source.

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When one hears of trouble in the South China Sea, it is almost always to do with resources -- oil, gas, rare earth elements. That and fish. Which means that harmony would break out if a fair division of the raw materials and delicacies could be found among the various Asian states, right? According to experts on the overlapping disputes, the answer may be no.

The U.S. and Philippines are conducting war games in the Filipino section of the South China Sea (pictured above), while the Philippines and China continue a standoff over fishing rights in a place called the Scarborough Shoal. Meanwhile, the Philippines has announced an enlarged estimate of gas reserves in the Reed Bank, a disputed area of the sea near the island of Palawan.

Collectively, this activity raises the temperature among China and its neighbors, not to mention the U.S., as I write at EnergyWire. While relatively little oil or gas has been proven as yet in the South China Sea, Bo Kong, a professor at Johns Hopkins University, says that high oil prices and technological advances raise the chance for strains. "Because of technological breakthroughs, we have a much better idea where the hydrocarbons are," Bo told me. "So I think we will see more activity, and there will be more friction."

That may be the case, says Kang Wu, a senior fellow at the East-West Center in Honolulu. After all, the U.S. Geological Survey estimates that some 20 billion barrels of oil underlie the South China Sea. Yet Kang also sees hydrocarbons and fish as a "pretext" for discord. The Philippines, Taiwan, China, Vietnam and the others, Kang says, would quarrel regardless of the presence of oil or fish.

It's all about the age-old issue of territory -- no one wants to lose any, and if the ownership of a particular spit of land is ambiguous, all want that too. Kang:

The South China Sea problem is a territorial, national sovereignty and security issue. Even if there is no economic benefit, even if there is no oil or gas, they will still challenge each other. No one is likely to give up their territorial claims.

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The mysterious psychology of price: The well-established wisdom is that consumers respond to psychological price points -- offer your product at $9.99, and shoppers are far more likely to buy it than at just a penny more, or $10. So it has been with gasoline: In 2008, American car-buyers fled gas-guzzling vehicles when fuel crossed the $4-a-gallon price point, bought more fuel-efficient models, and generally drove much less. This year, the same seems to have occurred, as I wrote -- with gasoline again approaching an average of $4 a gallon, we see far greater sales of fuel-efficient vehicles. Yet is it so simple? Perhaps not, says Paul Hunt, president of Pricing Solutions, a Toronto-based firm that advises companies on how to price their products. Hunt told me that consumers may only seem to be responding more negatively to $4 than to $3.99 a gallon, but that something else may actually be going on in their collective heads. It is not the per-gallon rate that sets a motorist's hair on fire, Hunt said. It is the $66.81 total price of filling up.

But when it comes to buying, are gasoline and shoes truly such different creatures? Surely, I asked Hunt, the sight of $4 on the gasoline station signboard is enough to drive off immediately to the Kia showroom. Only in the big picture, he replied. "People really look at the total fuel bill and make sure they can go to a restaurant once a week rather than pay for fuel," he said.

Maybe in 2008 it looked like people were making a decision because of $4 gas, but actually it was the total price that influenced them. [They are thinking], ‘It cost me $85 to fill up, and I want to save $10 a week.' They do the math.

Furthermore, the price has to stick. Even that $85 gas bill won't have a lasting impact unless a driver thinks that will be the price for a long time to come.

In a curious footnote, Hunt said that although price-per-gallon is not the pivotal fact on the way up, it can be on the way down. Motorists watch the signboard for a price that to them signifies "cheap." Then "they go hit the pumps," Hunt told me. "When prices are moving down, people have something that attracts them."

Go to the Jump for more of the Wrap.

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A key outcome of President Barack Obama's Asia tour is an apparent tactical withdrawal by China on drilling rights in the South China Sea. This does not mean that Vietnam, the Philippines and others in the sea can proceed with abandon, but -- at least for now -- Chinese naval ships may be less likely to interrupt oil and gas exploration. Locally there is some elation, with The Times of India calling it a "climbdown" by China.

The issue of who owns what waters in the East China and South China seas is wrapped up in both fortune and stature -- though the seas are relatively unexplored, some experts believe many billions of oil and gas lie underneath; in addition, China regards sovereignty over the waters as a sign of its great-power status. So over the last two years, numerous diplomatic and military confrontations have occurred between China and the oil-drilling plans of its neighbors. In 2010, it was particularly unseemly to observe Japan reduced to effective groveling after a confrontation with China over rare-earth minerals.

China being much larger, some of its intimidated neighbors have welcomed a stepped-up U.S. presence as an equalizer. That has played into narratives unfolding in the United States -- angst over a widely perceived national decline, along with Obama's difficult re-election battle.

All of these layers were on display Saturday, when 16 of 18 leaders gathered in Bali for an Asian summit one after another mustered their nerve and told Chinese Premier Wen Jiabao of their worry over the security of the waters off their shores. Obama expressed the same concern in the forum.

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The Philippines is engaged in a muscle-flexing row with China over oil drilling in the South China Sea, writes Andy Higgins at the Washington Post. So are India and Vietnam, reports Ishaan Thardoor at Time, who wonders whether war is possible between China and India.

The South China Sea is one of the world's energy flashpoints, and it's all about who has the rights to explore for a suspected treasure trove of undersea oil and gas. China asserts a historical claim to nearly the entirety of the South and East China seas, but faces competition from Brunei, Japan, Malaysia, the Philippines, Taiwan and Vietnam (Vietnamese protestors pictured above). No one knows whether there actually is a motherlode of hydrocarbons under the seabed of this island-strewn region. But there has been sufficient evidence to create a crisis of oil envy. China's rise as a global power is embedded in the friction.

This is not new nor surprising. In Monsoon, Bob Kaplan's fascinating analysis of this hub of geopolitical tectonic plates, we read of the escalating naval rivalry in the South China Sea, and a possible future conflict in the Indian Ocean. Of Beijing's aims in building up a blue-water naval force, Kaplan writes:

Above all, China's demand for energy motivates both its foreign policy and national security policy; the need for an increasing, uninterrupted flow of energy to sustain its dramatic economic growth. Despite its increasing emphasis on coal, biomass, nuclear power, and other alternatives, China requires ever more oil and natural gas. ... Concurrently, China officials see this very need for imported petroleum products as a pressure point that a future adversary might exploit. ... If you governed China, with the responsibility of lifting hundreds of millions of Chinese into an energy-ravenous, middle-class lifestyle, you, too, would seek a credible navy in order to protect your merchant fleet across the Indian Ocean and the western Pacific.

Indeed in a report issued yesterday, the U.S. Department of Energy reinforced other findings that China and India's relative energy appetite is soaring -- by 2035, they will account for 31 percent of world energy consumption, up from 21 percent in 2008.

But where some of the analysis goes astray is projecting too far in the future, and missing the implications of nearer-term outcomes. China is far, far away from matching the U.S. on the seas, but that matters less than one might think in the high-stakes brinksmanship under way in the South China Sea.

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A war against speculation: A coordinated set of acts by big oil consumers and the world's biggest crude producer is creating misery among oil traders. One is the planned injection of an impressive 60 million barrels of oil -- or about 42 days of Libya's usual exports -- over the next month onto the global market from strategic oil reserves, half of it from the United States. The second is Saudi Arabia's decision to show who is boss in OPEC by boosting its oil production to 9.5 million barrels a day, or even 10. The target of Saudi's ire is mainly Iran, which defied and embarrassed Saudi Arabia in an OPEC meeting earlier this month by helping to block the kingdom's aim of raising overall OPEC output and stemming market instability. Writing at the Financial Times, Citigroup analyst Ed Morse says Saudi ire is reflected in its wholehearted agreement with the strategic reserve release of oil. Why is all of this a war against speculation? Because, by knocking the wind out of oil prices at least for now, the twin acts reveal the bubble contained in prices even absent the Arab Spring. Over at the Wall Street Journal, Liam Denning says the lagging economy led President Barack Obama to put together a "coalition of the willing."

But is a war with a long-term victory in sight? Writing at the FT, Javier Blas says the answer is yes, and he lines up a formidible army of analysts to back up his assertion. I am not so sure. It seems to me that after awhile, oil traders will become less intimidated by the prospect that a release from the reserve will put the kabosh on their bets. They will relish the gamble. In fact a new sort of betting could emerge -- on whether the United States will pull out its petroleum reserve weapon. A sort of brinksmanship will result. In the end, the U.S. will continue to use the reserve only on rare occasions. And the players will be back in charge of the casino, pushing up and down the price of oil.

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Members of OPEC will agree to increase their official production today, but that won't do much to lower prices -- the plenitude of energy-related stress across the globe underscores more than ever how power has dispersed out of OPEC's hands. It's not only the civil war in Libya, and the loss of its 1.4 million barrels a day of oil exports, or the chaos in Yemen. From the South China Sea to Alberta, Canada, tempers are flared over the control and movement of oil.

The Vietnamese, the Filipinos and the Japanese are vexed over unneighborly behavior by China, which most recently severed the seismic cables of an oil exploration ship, and fired at fishing trawlers in the South China Sea. For their part, some Chinese call their neighbors plunderers and the U.S. a hegemonist. For now, southeast Asia is more worried about U.S.-Chinese friction over these confrontations than winning the debate of the moment with Beijing, and so the Obama administration has relaxed its posture of last year, when Secretary of State Hillary Clinton declared the dispute a U.S. strategic interest. I exchanged emails on this with Bonnie Glaser, a China expert at the Center for Strategic and International Studies. "I think that if Chinese intimidation of oil exploration activities continues, the U.S. will have to take a stronger stand -- especially if Exxon is involved.  But the Obama administration hopes it doesn't come to that," Glaser said.

Fighting continues in Sudan, this time in a contest over the breakaway south's oil, writes Jeffrey Gettleman at the New York Times. Southern Sudan is set to become independent next month, and Sudan President Omar Hassan al-Bashir has taken a hostage -- the entire town of Abyei -- as leverage in order to obtain more oil in the split-up. The south produces about 500,000 barrels of oil a day, and though there appears to be little chance of renewed full-out war as long as the south slices off some of that for the north, there is plenty of violence for now.

In western Pakistan, the Taliban yesterday again blew up U.S. fuel supply tankers destined for Afghanistan (pictured above). Such acts do not change the global picture, but illustrate the Taliban's understanding of the centrality of oil in running the war.

A more peaceful but still hardball struggle has gone on a long time between independent-minded Kurdistan and the central Iraqi government over control of natural gas in Kurdistan. There could be a deal yet as Prime Minister Nuri al-Maliki relies on Kurdish political support, writes Tamsin Carlisle at the National, but not very soon. Meanwhile Canada is grappling with the U.S. over its desire to send the bitumen from its Alberta oil sands to Gulf of Mexico refineries.

And all this excludes the impact of natural disasters, such as we may see with the summer hurricane season. So what OPEC decides will help to bump prices one way or the other, but it may not be the main determinant even today.

Update: We are getting a jump in oil prices this morning after OPEC's announced decision to punt on Saudi's proposed increase in production, and keep output where it is. Traders are engaging in opportunistic buying. This should last for a day or two until the reality of an oil glut settles in again, along with the multitude of other factors influencing prices.