Oil And Wars -- Part 2

For the past year the world's focus has been on the price of oil, its growing scarcity, its impact on the cost of food and the world economy, and the political instability and wars that it is causing.

The following article and analysis from The Telegraph suggests that everything may change:

Oil's perfect storm may blow over
The perfect storm that has swept oil prices to $132 a barrel may subside over the coming months as rising crude supply from unexpected corners of the world finally comes on stream, just as the global economic downturn begins to bite.

The forces behind the meteoric price rise this spring are slowly receding. Nigeria has boosted output by 200,000 barrels a day (BPD) this month, making up most of the shortfall caused by rebel attacks on pipelines in April.

The Geneva consultancy PetroLogistics says Iraq has added 300,000 bpd to a total of 2.57m as security is beefed up in the northern Kirkuk region.

"There is a strong rebound in supply," said the group's president Conrad Gerber.

Read more ....

Previous Post: Oil And War Part 1

News From Other Sources:
Oil prices pass US$135 a barrel after report of supply drop -- Oil Week
Oil Prices have to rise further -- Blog Activ
World stocks hurt by 135-dollar oil -- Breitbart
Democrat's Plan to Sue OPEC Does Not Bring Down Gas Prices -- Gateway Pundit

My Comment: Many countries are gearing up their oil production. But with the rest of the world rushing to develop their societies to the standard of the West, and oil being the essential fertilizer for this growth, production will not be able to meet future demands. The reasons why we find ourselves in this predicament are simple. Governments and politicians do not find oil. Oil companies are the ones who are the specialists in this area.

Countries that have nationalized and taken over their oil industries .... or countries that have made the decision like the U.S. to limit the development of their oil supplies .... will over a period of time find their position strongly dependent on other countries for their needs.

Iran cannot produce enough gas to feed their needs. Pemex of Mexico has produced an environmental nightmare for its citizens. Venezuela's oil production has collapsed to half of what it use to be. Corruption in Nigeria has fueled a civil war because the people who live on the land that has the oil are not benefiting from it. The same can also be said about Sudan.


It is no surprise that when you look at the above graph, it is the countries that permit a healthy environment for oil exploration and development are the ones who are increasing production (Yes I know about Russia ... but even with its past disagreements with foreign oil companies, they are now there).

Will wars decrease if the price of oil goes down .... my answer to that is a no. Countries like Venezuela, Iran, and Russia are now heavily dependent on the revenues that oil produces. Any decrease in the price will mean less revenues for these governments, and even lesser money to dole out to their expectant citizens. When a people have high expectations, and when these expectations are not met .... the reaction can get ugly.