Chip Cummins, Bhushan Bahree, Shai Oster And John Fialka, staff reporters for the Wall Street Journal, wrote an excellent article Five Who Laid the Groundwork For Historic Spike in Oil Market (subscription required).
The oil shocks of the 1970s and 1980s happened for a simple reason: huge and sudden cuts in supply. After supply was restored, oil prices eased.
Today's energy crunch -- which has seen oil prices double since 2003 -- is different. Once again, supply shocks have played a role, including those triggered by hurricanes in the oil-rich Gulf of Mexico and the U.S. invasion of Iraq.
But the real cause is a profound shift in the global energy system that has been 25 years in the making: The world's thirst for oil has grown faster than the industry's ability to slake it. As recently as the late 1990s there were gluts. Now there is virtually no spare oil left.
I think people have not fully comprehended the seismic change in fossil fuel availability. Once plentiful, oil and gas are now scarce commodities, especially with China being a voracious consumer of nearly all commodities. In fact, China has just revised its GDP figures indicating that it grew its economy at nearly 17% in 2004.
Not only are consumers being affected by the prices they pay, but also geopolitical forces are reshaping the political landscape as some countries that have resources are using their resources to exert influence over others. This reshaping is prevalent in Eastern Europe and Latin America.
My belief is that we will see many interesting developments, both economically and politically, from higher energy prices in the years to come. This topic should definitely be front and center on your radar screen.