Unlike the oil 'shocks' of the 1970s, the current energy crisis is almost certain to be long-lasting. None of the quick fixes proposed by pundits and politicians - drilling in protected wilderness and maritime areas, curbs on commodity speculators, pressure on members of Opec to increase output - is likely to have much impact. In 1973-74 and again in 1979-80, events in the Middle East led to a sharp reduction in the flow of oil from the Persian Gulf, causing a contraction in global supplies and a rise in energy prices, and thus sparking a global recession. But when equilibrium of a sort was restored to the region, the oil began to flow again and the crisis passed. Now, however, the imbalance between supply and demand is largely due to factors inherent in oil commerce itself - and so is less easily solved.

LRB 14 August 2008 | PDF Download