Joe, I observe your propensity to view everything through a polarizing lens. But in reality Islamic terrorism has very little to do with the last couple years' run-up in oil prices.
About a third or half of the run-up (my estimate) is due to fundamental demand and supply. The US abandoned fuel efficiency efforts about 10 years ago, CAFE hadn't been updated since the 1980s, American consumers shifted to big SUVs helped by tax breaks. China and other emerging markets are developing strongly and their oil consumption is growing to match. Many years of low oil prices (remember $25/bbl?) starved the oil industry of investment and development. Some large existing fields went into decline. Some major oil-producing countries mis-managed their national oil companies. Various other factors too. So now the global spare oil production capacity is near record lows (<2MM bbl/day) and the peak oil theorists are having a field day.
About a third of the run-up (my estimate) is due to financial speculation. Global stock markets, real estate markets, bond markets all acting badly for over a year, at least. Inflation rising and US dollar declining. Investors looking for a counter-cyclical asset, and found it in oil and other commodities (metals, grains). $300BN of hot money poured into commodities futures markets that had never handled such sums before. This is hedge funds, pension funds, retail investors via commodity ETFs. Oil contracts are largely priced off oil futures, so financial flows drove up spot prices. You can see how oil px correlates to inverse of USD/EUR, for example.
The rest of the run-up (my estimate) is due to political risk - hard to separate from general financial speculation, but you see this at work every time there is saber-rattling over Iran.
Notice that Islamic terrorism doesn't figure much in the above. A little bit of impact, e.g. you might call the Nigerian MEND group terrorists but they aren't really what I would call Islamic terrorists.
AFAIK they are more upset about the fact that Nigeria has collected $400BN of oil revenues but its people remain among the poorest on earth.
Now, I think Islamic terrorists have the ability to impact the oil market, if they aggressively started attacking oil facilities in the Middle East. But that hasn't been their focus,
AFAIK. For example, The Taliban is spending its bodies attacking US bases in Afghanistan, not Saudi pipelines.
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Originally Posted by Joeaksa
What the F is happening here is that the terrorists are bankrupting us. By causing unrest around the world, especially in the oil producting areas, they are squeezing the noose tighter and tighter day by day. The cost to do anything that requires oil, especially driving, is killing our economy and way of life, and that of other countries around the world.
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