ABSTRACT
The world today finds itself in an era of energy insecurity. A number of broad factors across the value chain, and on both the supply side and the demand side, have contributed to record-high prices.1 What has exacerbated worries over energy has not been solely that prices have risen so high or so fast, but that, having attained these peaks, they have shown no inclination of returning to their “natural range.”2 Rather, ongoing discontinuities continue to plague the system, with the result that prices are now in a structurally higher range of $55-$75 per barrel for West Texas Intermediate (WTI), with peaks (as of this writing) well above that. And while actual and current disruptions bear the brunt of the blame for boosting prices to today’s levels, the role of fear over future threats to supply cannot be overlooked. No other region in the world faces either the same number of potential threats to supply or the same volumes at risk as does the Middle East. The Gulf states of Saudi Arabia, Iran, Iraq, Kuwait, Qatar and the United Arab Emirates between them produce approximately one-quarter of the world’s daily oil production.3 But now, perhaps more than ever, they find themselves collectively and individually bedeviled by a host of threats ranging from the collapse of Iraq to the challenges of a nuclear Iran to persistent terrorist activity. Intra-regional struggles are being exacerbated by the involvement of external players, and neither set of trends appears likely to dissipate any time soon. While the militarization of energy resource management is nothing new to the region, and indeed some of these issues smack of old wine in new bottles, the conflation of these trends at precisely the time that US influence around the globe and this region in particular has waned (and, indeed, partly owing to the fact that it has done so), certainly complicates the issue, possibly to a degree not seen before.
