Energy May Lie At Root Of China-Japan Island Dispute

Oil, natural gas ... you bet!

Why are China and Japan locked in a tense face-off, alarming the world and inflicting substantial economic pain on themselves, over a bunch of tiny uninhabited islands in the East China Sea?

Nationalist politics and historical resentments figure heavily in the territorial dispute, as do fish. But there's another potent ingredient: energy.

In Asia, and especially in China, demand for power and fuel is fast outstripping supply. (Related: "Pictures: A Rare Look Inside China's Energy Machine") Meanwhile, advances in deepwater drilling technology have put offshore oil and gas resources within reach for the first time. The result of all this, says Stephanie Kleine-Ahlbrandt, Northeast Asia director of the International Crisis Group, which studies conflict hot spots, is a "race to assert control over energy resources in disputed territories before they are developed by a rival."

Last spring China began drilling in deep water in the South China Sea—rattling Vietnam, the Philippines, and other nations that have competing territorial claims.