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Who's Enjoying the Energy Crisis?Hint: It's not OPEC.

By Anne Applebaum
Posted Wednesday, Sept. 13, 2000, at 3:00 AM ET

In Wales, a 62-year-old man died early this week while waiting in a long line for gasoline. Doctors said afterward that he had expired from "stress and heat." Elsewhere in Britain, more than a quarter of the nation's "petrol stations" ran dry after panic-buying Monday; truck drivers blockaded most of the country's major refineries Tuesday; protesters banged on Tony Blair's Jaguar shouting "shame on you"; a rogue Texaco station in Derby was found to be selling gas at more than $16 a gallon. Meanwhile, over in Brussels, more than 2,000 trucks, buses, and taxis have been blocking the city center for three days running, with German, Dutch, and Italian drivers threatening to follow suit in their own cities. France, where protests have naturally been the most extreme, is only now recovering from the trucker strikes of the past few weeks. They joined with boat drivers to block the Seine and with taxi drivers to choke off several cities. Along the Channel they prevented access to ports and left tourists stranded for days.

In short, the "coming oil crisis," as the American media refer to it, has already arrived over here in Europe, bringing with it a wave of 1970s nostalgia: the gasoline lines, the specter of inflation, the fond memories of the Carter administration (remember those peanut cartoons?), the return to currency of old-fashioned words like "recession." But before everyone gets all weepy and starts humming Bee Gees tunes, it might be worth looking at how different, this time around, the international impact of the apparently unstoppable rise in oil prices is going to be. None of the villains is going to be quite the same—and none of the victims either.

Look, for example, at the relatively understanding attitude toward the Old Villains: If the Gulf Arabs were the prime focus of angst and anger last time around, this time they won't be, or anyway not to the same extent. It's a different OPEC we're dealing with these days, post-Desert Storm: less dominant of the oil market, more open (it even has Web site) anxious not to hurt its biggest buyers too much. As far back as last February, Saudi Arabia issued a joint statement with U.S. Energy Secretary Bill Richardson, agreeing that "price volatility in world oil markets is detrimental to both producing and consuming nations" and promising to "avoid harming the world economy." Nor is it so clear that high prices are its fault, given that on Monday OPEC agreed to raise its output by 800,000 barrels a day—and in response, unimpressed markets pushed the price of crude up further.

Neither are the Old Victims quite the same. High oil prices remain big trouble for Japan and Western Europe, of course, but while the last oil crisis notably altered the balance of power in the Arab-Israeli conflict, it's hard to see how the current Palestinian-Israeli negotiations will be affected. The questions of, say, whether it is feasible to put an international border between the mosque on the Temple Mount and the Wailing Wall just below (yes, that's a real possibility) won't really be answered differently if Saudi Arabia becomes even richer.

But this time around, there are some New Victims too, most notably in Eastern Europe. No longer propped up by subsidized Soviet oil prices, all the newly emerging democracies, or whatever you want to call them, are especially vulnerable, thanks to their greater susceptibility to inflation and their near-total dependence on Russia for oil. In the case of some, this might have big political implications. Ukraine, for example, already reliant on its larger neighbor for most of its trade, will be made seriously destabilized by high oil prices, thereby propelling the country further into Russia's geopolitical embrace.

As this week's events prove, New Villains are emerging too. In Europe, virtually all the consumer anger and anxiety is focused, this time around, not on the Arabs but on European governments; consumer groups like Boycott the Pumps, which have been calling for regular gas station boycotts since August (click here if you want to join them) are gaining ground, and they are mostly blaming their own leadership for high fuel taxes that are the real cause of high consumer fuel prices. Tax revolt is such a rare thing here that no one even knows quite how to respond to it. Tony Blair tried to deflect the blame onto OPEC, for example, but that only made things worse. He was immediately caught out by editorialists and columnists who pointed out that 80 percent of the retail fuel price in Britain is in fact accounted for by taxes. Only the French government, so far, has bowed to what is developing into one of the greatest European tax revolts of all time: French truckers finally agreed to stop blocking the streets only when the French government agreed to lower fuel taxes by 15 percent—a deal worth about $2,000 per truck per year. Concessions from others may follow, with concurrent damage to any plans Europe's mostly left-wing governments may have had for welfare-state expansion.

There are also, this time around, New Victors, although that distinction may be a dubious one. Russia, whose entire economy is now propped up by oil, stands to gain in a big way—but is this really the best thing for the country? A long-term boom in oil prices would allow President Vladimir Putin to put off reforms indefinitely, would give him extra cash to pump into his tattered army, would enable him, in other words, to keep on going as if nothing had changed—just as high oil prices enabled his Soviet predecessors to go on as if nothing had changed in the 1970s—thereby setting the stage for an even more dramatic collapse when oil prices go down again. One can also imagine, if things get really bad, that high oil prices could conceivably help Iraq. Sooner or later, someone may well call for a lifting of sanctions, although a reliable source tells me that Iraq isn't really in a position to start pumping huge quantities of oil at the moment anyway. Years of investment would be required—nothing would happen fast enough to change the current status quo.

Finally, sustained high prices could bring with them New Trouble Spots To Watch. As a reliable source of international tension and unrest, the Caspian Sea region may well turn out to be the new Middle East. Already disturbed by the Chechen war, the Armenian-Azeri conflict and a staggering array of weak governments, the region could easily be plunged into political chaos by a rapid and dirty race to develop the oil resources of the region. These are the sort of places no one would bother developing if oil was $5 a barrel, the political risks being too high. But if it's $35—and if it's going to stay $35—then it suddenly looks interesting to compete, even—especially—for the Russians, not to mention BP and Exxon. Not, again, that this will necessarily do the locals any good: Following the Nigerian model of development can't be the best medicine for regimes of dubious stability. Let's face it—oil is a curse for any country. Too bad we can't all use less of it.

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Anne Applebaum is a Washington Post and Slate columnist. Her most recent book is Gulag: A History.
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Reader Comments from The Fray:


The current situation in Britain could not have been handled any worse by the government. There seems to have emerged a relationship within modern industrialized nations that the public has a duty to the governments, with no real reciprocity. The situation as I see it is that we elect these people to serve us, not the other way around. Mr. Blair's unwillingness to back down, and his threat instead to use the army, surely has secured Labour the next term of Government on the opposition benches. True, the globalization of world economies and politics has effectively left the nation-state (and I'm sure many will argue against me) as an outdated entity, but the few powers they do still control (taxation) should be fair and competitive. Mr. Blair seems set to cripple U.K. haulage companies with the extortionately high petrol prices in comparison to the rest of Europe. Whose government is it? Certainly not the people's.

--Graeme Coultish

(To reply, click here.)


Bea writes in The Fray:

Nowhere in the story do you mention the real villains, the oil companies! Just because there is a shortage of oil doesn't mean that the price has to go up. The price only goes up to maintain the profits of the oil companies.

I guess I missed the part of the Constitution that says oil companies must raise production so that you can drive an SUV at a low cost. The oil companies are making money, is that their fault? I don't think so. My guess is that they are not producing more oil because it is not like turning on your faucet. There is a timelag in the exploration, development, transportation and sale of oil.

--NKVD

(To reply, click here.)

(9/18)

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