Friday, June 20, 2008

The Geopolitics of $130 Oil

Today I am featuring an article that examines the ramifications of recent increases in commodity prices. It argues that we are entering a new geopolitical era; following the previous eras of the Cold War, post-Cold war economic boom, and subsequent period of international Islamic fundamentalist terror from 9/11 to today.

This new era of increased commodity cost will present many challenges - with oil and food being the major players, owing to the fact that they are inextricably linked and our daily lives are dependent on both.

Oil and grains — where the shortages hit hardest — are not merely strategic commodities. They are geopolitical commodities. All nations require them, and a shift in the price or availability of either triggers shifts in relationships within and among nations.
The article highlights the potential winners and losers in this new paradigm. Their conclusions may surprise you a bit.

One thing to keep in mind...just because we have perhaps moved into a new era does not mean that the problems from previous areas are solved, only superseded. Just as 9/11 did not erase economic issues, high commodity prices have not destroyed Islamic extremism. Perhaps the fact that it has the potential to move the issue to the back burner is even more concerning. Considering the majority of known oil reserves are in areas that are highly accessible to terrorism, we should not neglect the risk posed by these entities. Even our old cold war adversary, flush with oil and natural gas (and willing to use it as a geopolitical tool), is gaining ground.

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