As revolution and rebellion sweep the Middle East, Americans watch as their gas prices creep upwards. Oil is, of course, the defining factor of the Middle East and the foundation of our interest in the region. Oil and the money it generates have helped create and sustain autocratic leaders and dictatorships. It yields the funds needed to maintain oppressive states. It also provides the influence needed to ensure that other nations will be willing to support almost any regime that can keep the oil flowing.
Speaking of oil, given that the region is so volatile, one might wonder why we are still so reliant on oil and why major companies are quite willing to stick with it as their prime source of profit. One obvious reason is inertia and investment-the economy grew on oil and is designed to run on oil. Switching over is seen as costly and difficult and hence there is little inclination to do so.
Another possible factor is that the volatility provides a built in price enhancer. After all, almost as soon as news of trouble in the Middle East makes the news, oil prices begin to rise. For example, the unrest in Libya is currently used to justify a significant increase in the price of oil. These surges in prices provide excellent sources of profit boosts and they happen often enough that they can be counted on.
Of course, the unrest does present some risks. Facilities can be damaged, people can come into power that are not friendly to the oil companies, supplies can be cut in a way that actually interferes with profits and so on. However, it does seem that a crisis in the Middle East is generally money in the bank for certain companies.
For the rest of us, the fluctuation of oil prices would seem to give us yet another reason to get away from an oil based economy. Of course, such attempts are slammed as being unrealistic, leftist, unnecessary or otherwise defective and hence little or anything is every done.