Rising Demand for Oil Provokes New Energy Crisis

With oil prices approaching the symbolic threshold of $100 a barrel, the
world is headed toward its third energy shock in a generation. But today’s
surge is fundamentally different from the previous oil crises, with broad
and longer-lasting global implications.

Just as in the energy crises of the 1970s and ’80s, today’s high prices
are causing anxiety and pain for consumers, and igniting wider fears about
the impact on the economy.

Unlike past oil shocks, which were caused by sudden interruptions in
exports from the Middle East, this time prices have been rising steadily
as demand for gasoline grows in developed countries, as hundreds of
millions of Chinese and Indians climb out of poverty and as other
developing economies grow at a sizzling pace.

“This is the world’s first demand-led energy shock,” said Lawrence
Goldstein, an economist at the Energy Policy Research Foundation of
Washington.

Forecasts of future oil prices range widely. Some analysts see them
falling next year to $75, or even lower, while a few project $120 oil.
Virtually no one foresees a return to the $20 oil of a decade ago, meaning
consumers should brace for an era of significantly higher fuel costs.

At the root of the stunning rise in the price of oil, up 56 percent this
year and 365 percent in a decade, is a positive development: an
unprecedented boom in the world economy.

Demand from China and India alone is expected to double in the next two
decades as their economies continue to expand, with people there buying
more cars and moving to cities to seek a way of life long taken for
granted in the West.

By JAD MOUAWAD
The New York Times