Oil’s collapse is now a story so old that you’d almost think it a good idea to buy oil futures.
Then Black Monday happened and pushed oil lower.
But before today, the real story of oil — the one resource Modern Earth can’t do without — was how it moved the nations of the world. Tiny states in blazing deserts hold outsized influence because a lot of dinosaurs died where they happened to set up shop a century ago. Britain’s economy remained afloat through the quagmire of the Seventies because of the North Sea. The US, the world’s largest and most powerful economy, tips near recession every time oil goes over $120 a barrel. A huge motivator of and objective of World War II was control of oil fields and oil reserves, and a few wars may have happened in the meanwhile over the black liquid.
Central Asia is experiencing the effects of this as we speak. Azerbaijan at least had the foresight to diversify its economy while oil was expensive; it’s likely to see through the current rough patch without too many headaches. But Iran, Russia, and the oil-producing -stans are in for pain but good; and that pain will translate into both more regional instability and less power projection. Given Iran’s and Russia’s leadership, that will likely feed instability.
You’d think lower natural gas and oil prices would make the coming winter easier, but you’d be wrong. Russia will lock down on its gas and oil control more than ever, and the -stans will hunker down on their citizens; it’s the pattern and has been for years. More repression, more uncertainty, and more violence. While we in the West enjoy cheaper oil, much of the former Soviet Union is going to take it in the gut.
Then again, if the whole world is heading for another recession (and at the close of the German markets, that looks like a good bet), maybe we’ll get all of that ahead of schedule.
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