By Mathew Maavak
Some of those oil-related doomsday scenarios might meet at a confluence this week. It includes an armed aggression against a sovereign state, terrorism, missile launches, weapons of massive destruction, and disturbing consumer, financial and trade data worldwide.
If that isn't enough, there is even a volcanic eruption somewhere, and hurricanes yet to come.
The Observer on Sunday carried an article headlined "The Road to War." The subheading said it all - "We could all be in deep, deep trouble." In five days, the right powder keg has been lit; one that "could blow out all the lights."
The last two weeks have seen Kim Jong-il misfiring the most vaunted of Pyongyang's seven missiles, Israel pounding the daylights out of Gaza, and a major terrorist attack in Mumbai on a spectacularly catchy day, dubbed 7/11.
The Korea Herald had predicted that Israel would open a second front in Lebanon once the July 12 deadline delivered to Iran over its nuclear enrichment program reached a natural denouement.
On Tuesday, July 11, Iranian-backed Hezbollah fighters conducted an audacious raid across the Israeli border to kill eight soldiers and kidnap two. The Hezbollah wanted three of its imprisoned members released in exchange. That was all, at least ostensibly, though neither belligerents were naive about the outcome.
Israel began to bomb Lebanese towns back to the 1970s, and its warplanes were proving more effective than Operation Enduring Freedom's goal of bombing Afghanistan back to the Stone Age it was in the first place.
This came at the worst possible time. Interest rate hikes were already hobbling markets worldwide, global inflation was beginning to set in, and a dreaded U.S. consumer price index report is about to be released.
They were all overshadowed by the combatants' zeal in the Holy Land. All these were taking place with the G8 summit as the backcloth.
Not an irony as one might think. The G8 has its origins in the Group of Five, which first met in 1975 to coordinate economic and energy policies in the wake of the 1973 Arab oil embargo, a rise in inflation and a global economic slowdown.
Sounds familiar? At St. Petersburg, Russian President Vladimir Putin was glad that the leaders present could "synchronize their watches on a host of world crises and provide a 'boost to the G-8 summit'" as the Associated Press put it.
There are plenty of red-hot incandescent crises piping hot here and there. One of them was Ecuador's Tungurahua volcano which spewed ash, gas and molten rock during the weekend. Ecuador produces about 550,000 barrels of crude per day, and such pittance is now significant in a world where secure energy supplies can only be guaranteed by 30-odd nations with immense economic, political and military power combined.
There is indeed a plan afoot to expand the exclusive club of eight members to include democracies, tyrannies and theocracies; one where China's String of Pearls geostrategy fits in uneasily with trade pacts Washington is stringing up all over the world.
Call this the G-string of energy geopolitics, where "G" stands for Globocop.
One avenue would be to develop the little-known Joint Oil Data Initiative (JODI) into a security tool. The 12-page communiqué issued by the G8 on Sunday hinted at securing and diversifying energy supplies. It claims:
"Ensuring sufficient, reliable and environmentally responsible supplies of energy at prices reflecting market fundamentals is a challenge for our countries and for mankind as a whole."
The G8 represent mankind -- for smooth global trade -- just as the U.N. Security Council ensures peace in our times. Expand that to a G30, and trade can be carried atop tankers, tanks and tomahawks.
On Feb. 14, the International Energy Agency had given assurances that its member governments would coordinate the release of strategic oil reserves for up to 18 months in case of an Iranian crude shutdown. Little else is known on how this could be achieved. Besides, why are markets so worried when such ironclad assurances abound?
JODI's website has this formula to solve our energy woes:
"The opening of the JODI database to the public is not the final goal of this initiative." Instead, it aims for complete transparency right from reserves to "refinery intake, refinery output, imports and exports."
This is like asking central banks to blog their ultra-secretive reserves of gold and hard currencies.
Fat chance but roll out a fat check and the Geneva-based Petrologistics can supply all the data one needs. It is purported to have data on every reservoir, oil refinery, and import-export flows the world over. According to "peak oil" expert Matthew R. Simmons, Petrologistics even has a worldwide network of harbor "spies" armed with binoculars for a first-hand verification of fantastic claims and tanker flows.
It would still not be enough to factor in the imponderables. There are pipeline attacks in Nigeria, Hugo Chavez, threats of more missile launches from Pyongyang and the prospect of an outright global financial depression.
The "what is next?" has been asked over the past five days by many energy experts. The biggest worry now is that Israel's two-fronted bombardment will draw in the Syrians and Iranians into an oil-gutted conflagration stretching from Tel Aviv to Kashmir.
For a nightmare scenario, think of a Hezbollah drone smashing into some nerve center in Tel Aviv, spewing out a load of noxious chemicals.
The appropriate day would be 8/11!
Even if world peace arrived this week, oil cannot retreat to $50-$60 in the coming months. The best national economies can hope for is a $80-$90 bandwidth for the rest of the year.
Keep those fingers crossed though. A deux ex machina may be in the offing, to lull us for the day when tomorrow never comes.
First published in The Korea Herald on July 18, 2006
Most of Mathew Maavak's commentaries can be read here or visit the Panoptic World homepage.