Chapter 5 Oil price increase

Abstract

Global imbalances and financial crisis discussed in the preceding chapters were not the only contemporary issues that shaped the current and future landscape of the world economy. Since 2004, many countries also felt a significant shock prompted by a surge in the oil price, forcing them to look for the appropriate policy response that would produce least pain and minimum impact on welfare. The fact that oil remains an important source of energy for many countries, developed and developing alike, a price surge can trigger a new round of global conflicts. Indeed, from the hording of grain in Neolithic times to rivalry over resources in the interimperial wars of the 16th–19th centuries that laid the groundwork for World War I, and to modern nations warring over oil, competition and the desire to have a control over the possession of critical sources of vital materials had always been at the center of conflicts from the very beginning of human story. To prop up their industrialization, for a long period of time developed countries had relied on a stable supply of oil, making their political and strategic relations with oil-producing countries so critical, yet fragile and crisis prone. Conflicts and wars over oil were fought among the oil-producing countries as well.¹ Although it was not admitted by the U.S. administration, at least not publicly, the desire to have greater control over oil was also the primary reason for the 2003 U.S. invasion of Iraq.

Citation

Azis, I.J. (2009), "Chapter 5 Oil price increase", Azis, I.J. (Ed.) Crisis, Complexity and Conflict (Contributions to Conflict Management, Peace Economics and Development, Vol. 9), Emerald Group Publishing Limited, Leeds, pp. 99-153. https://doi.org/10.1108/S1572-8323(2009)0000009008