Slippery Slope

Americans seem to be blissfully unaware of how precarious our oil and gasoline supplies are, especially considering that our economic well-being depends on political stability in countries like Nigeria, or the forbearance of foreign leaders who essentially don't like us, such as Hugo Chavez, or the maintenance of a friendly regime in Saudi Arabia.

Today the price of crude oil, which had been hovering in the mid-to-high fifty dollar range for the past month or so, spiked up to over $61 a barrel, mainly due to guerilla attacks on production facilities in Nigeria which have caused a ten percent drop in output.

The Movement for the Emancipation of the Niger Delta, one of those rag-tag private armies for which West Africa is famous, earlier this week attacked a Royal Dutch Shell pumping station, forcing evacuation of its 330 workers.

MEND, along with another shadowy militia, the Niger Delta Volunteer Force, said they are fighting to give the local Ijaw people a greater share of oil revenues and vowed "to stop the capacity of Nigeria to export oil."

Foreign pressure on the Nigerian government to deal with these soldiers (or bandits) is mounting, since they're demanding $1.5 billion from Shell oil, supposedly as compensation for pollution in the Niger Delta.

It's this local African shakedown which is causing upward pressure on world petroleum prices. Phil Flynn, an energy analyst at Alaron Trading in Chicago explains, "The constant political upheavals in oil-producing countries continue to overshadow the current state of abundant supply. The line between oversupply and under-supply has never been thinner. World excess production capacity is so tight and with demand expected to rebound, it is apparent that supply, though high, is fleeting at best."

We've been lucky this winter, but our luck is going to run out sooner or later, especially considering that our supply of the life's blood of our energy-dependent society depends on the political situation in unstable places like Nigeria, and the maintenance of friendly rulers in places which are hostile to us such as Saudi Arabia.

What are the chances that Venezuela's President Hugo Chavez will become so annoyed with the whining of Condoleeza Rice that he'll embargo oil shipments to the U.S. and go looking for other customers, and find them?

We're walking the razor's edge with regard to our oil supply. The razor is tilted uphill and it's greasy to boot.