In 1974 the oil price shock hit the industrialised West hard but left most parts of the less-developed world relatively unscathed. The Cambodian peasant plodding behind his Ox spreading human shit on his rice paddy could ask "Price shock? What price shock?". No longer. Today he's the grandfather of a large family that owns a dozen Japanese motor bikes and scooters and grows bijou vegetables plump on commercial fertilisers in polytunnels (the human shit these days all goes into large murky lagoons to fatten up those succulent giant farmed prawns that Tesco sell so cheaply). Likewise, the population of the Maghreb has exploded since the '70s, and Egypt is overcrowded with energetic young people all eager to consume as much electricity as possible. Those who will bear the pain of an oil price shock today are those at the margin across the world; those still living in corrugated tin shacks but with LCD tellies, a Korean-made Aircon unit and a laptop. Whilst globalisation has slashed the numbers across the globe living on a dollar a day it has also made them uniquely vulnerable to the price movements of a single commodity - oil.
Whether Saudi oil production is stuck on a plateau, as the Guardian suggests today, whether less-economic forms of production such as deep sea wells or tar sands come on stream as prices rise, whether we've reached 'peak oil' or whether it's decades away are not questions I'd care to try to answer. What I can't miss is that none of the commentators I rely upon (C@W amongst them) are describing the recent oil price rises as a 'spike' that will quickly fall. The paradox is that much of the social and political unrest fuelled by high oil prices will be in the oil producing nations; the dilemma their often-despotic governments face is this - if they increase production to lower prices, the West benefits and they have less profit to keep their people quiet. If they maintain production at the cusp of demand, they make good profits but risk being hanged from the well-heads by a revolting populace. Tough call.