Common Sense Comes to Town!

Common sense is the most fairly distributed thing in the world, for each one thinks he is so well-endowed with it that even those who are hardest to satisfy in all other matters are not in the habit of desiring more of it than they already have. (Descartes)

The (True) Price of Oil

Posted on | February 25, 2011 | No Comments

If you hadn’t yet made the link between geopolitical struggles and the price of gas, the last few days’ events have probably helped you bridge that gap. Now more than ever, the crisis unfolding in the Arab world makes us realize that the North American lifestyle rests solely on the complacency of these dictatorships. Dictators we propped up and supported in order to maintain this very lifestyle.  

Revolutions in Libya (18th producer – 1,5 million barrels per day), Egypt (28th producer, 630 000 barrels per day) and Tunisia (52nd producer, less than 100 000 barrels per day) do not even add up to 3% of world production, and Bahrain is a negligible producer. The price of crude oil nevertheless rose by nearly 10% since unrest began in these countries.

 Saudi Arabia, Iran, the United Arab Emirates, Kuwait, Iraq and Algeria, in decreasing order, are all more important producers, accounting for more than a quarter of global production. Yet none of these countries is a model of democratic participation. The dictators’ waltz danced by the Western world aimed to ensure that no player would control too large a slice of the pie. But now the economic interests linked to oil production and distribution will, at best, be subjected to democratic populations who may not be so complacent or, at worse, greedily grasped by neighbours ready to extend their influence (and Iran is keeping a close watch on this whole situation).

You don’t need to be a prophet to predict that the spread of revolution to these nations will sustain the increasing oil prices. Meanwhile we still lack these nifty high speed trains in North America, and still favour metropolitan politics relying on urban sprawl and the dependency on automobiles. The dictators’ discount however no longer applies to crude prices – expect to pay the true price of oil very soon.

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