Until now, it hasn’t been too important to decide precisely what role oil plays, just so long as everyone agrees that it’s awfully important to a country that is addicted to the stuff.

Unfortunately for the US, this pleasant condition of benign acceptance of oil being part of the national fabric and of America being the natural ruler of the oil world, is about to be turned on its head.

China – the country that Americans love to hate most now that Russia has been tamed – is the fly in the oil-ointment through CNOOC’s plans to launch a counter-bid against Chevron for Unocal.

If it was any other rival to Chevron no one would really care. But the fact that the CNOOC is a Chinese corporation has raised more than eyebrows in Washington, and unless someone else enters the game, or Chevron lifts its bid substantially, oil could become a serious battleground in the war of words between the US and China.

The Slug, confident that most readers are up to speed on this emerging situation, would like to skip to what is likely to happen rather than dwell on events so far – but suffice to say that Chevron wants to pay $US16.6 billion for Unocal and CNOOC is offering $US18.5 billion.

Cash is the first issue here, and CNOOC has been clever in substantially over-bidding Chevron with what some critics might see as a knockout bid – at least The Slug sees an extra A$1.9 billion on the table as pretty close to a knockout.

Unocal shareholders face a choice, take the Chinese money and run (which seems like an awfully good idea), or wait for Chevron to counter-counter bid – which may happen, but is less than certain because of the gap between its original offer and CNOOC’s whopper counter-offer.

This is where a second issue enters the game – national interest. So far, the only people playing that card are a handful of extreme-right US legislators who argue that Unocal is an important American company and that there is a national security factor at work.

If the anti-Chinese lobby has its way the CNOOC bid for Unocal will be referred to some form of government/legal inquiry, with security overtones, that could bury it for years.

The Slug reckons that this is a possibility, but a more interesting development could be Chevron agreeing to increase its bid, to avoid a messy inquiry – but to do that with some form of private deal with the US government.

This might sound far-fetched, but it would be awfully easy for someone in Washington who knows the oil game inside out, say a chap called George W Bush or even vice president Dick Cheney, to suggest that a few billion more on the table from Chevron would save a lot of trouble and, by the way, a few government favours are heading your way.

If something like that doesn’t happen then Unocal risks becoming a serious thorn in George W’s side because there is already a division of opinion among deep thinkers about whether the US should regard the international oil patch as its private preserve.

Unocal, as has been pointed out by a number of observers, is US-based but 70% of its oil is produced in Asia. For the US to launch some sort of national security inquiry would attract severe criticism, especially as at least half the planet believes that the US went to war in Iraq over the oil.

Whatever happens, Unocal has become a flash point, and not just for issues of who should own of oil assets. It has become an point of national pride, and that’s a big deal in a country that believes it is the natural controller of world oil.

And, apart from all that there is the ABC factor at work – you know the one, the shorthand way of saying: “Anything But China”.