Last week, after hitting $146 a barrel, the price of crude oil took a sudden, two-day, $9 plunge, based in part on comments by Iranian President Ahmadinejad that an attack on Iran was unlikely and on a mid-Atlantic turn north by Bertha, the season’s first significant hurricane, away from the oil-rig and refinery rich Gulf of Mexico. It was just long enough for pundits to wonder, hesitantly and somewhat wistfully, whether the global economic bad weather had finally hit the oil market, and whether lowered demand meant that a new (downward) trend was on the way. That was, of course, before the Iranians started lobbing missiles, and traders got edgy about a promised week-long strike at Brazil’s state-run oil giant Petrobras and the kidnapping of at least one foreign ! oil worker in the Niger Delta region of Nigeria. By Friday, the “trend” was toast and the price of a barrel of crude had briefly crested above $147.
Get used to it. As Middle Eastern (which means “oil”) expert Dilip Hiro indicates, we’ve definitively entered the era of no-relief-in-sight and there’s no turning back now either. The author of a vivid history of oil in our world, Blood of the Earth, The Battle for the World’s Vanishing Oil Resources, Hiro considers why the present oil shock can’t be compared to the three shocks that preceded it and then explores just where the planet is likely to look in the medium term for energy (and global warming) relief.
Energy is obviously going to remain fiercely at the heart of our problems, locally and globally, indefinitely. Tomdispatch plans to respond to this essential reality with a range of different perspectives on energy in the coming year. Tom
The Current Oil Shock
When will it end, this crushing rise in the price of gasoline, now averaging $4.10 a gallon at the pump? The question is uppermost in the minds of American motorists as they plan vacations or simply review their daily journeys. The short answer is simple as well: “Not soon.”
As yet there is no sign of a reversal in oil’s upward price thrust, which has more than doubled in a year, cresting recently above $146 a barrel. The current oil shock, the fourth of its kind in the past three-and-a-half decades, and the deadliest so far, shows every sign of continuing for a long, long stretch.
The previous oil shocks — in 1973-74, 1980, and 1990-91 — stemmed from specific interruptions of energy supplies from the Middle East due, respectively, to an Arab-Israeli war, the Iranian revolution, and Iraq’s invasion of Kuwait. Once peace was restored, a post-revolutionary order established, or the invader expelled, vital Middle Eastern energy supplies returned to normal. The fourth oil shock, however, belongs in a different category altogether.