Exclusive Analysis: 'Arab resource nationalism on the horizon'

By Eric Watkins
London-based Exclusive Analysis has published some tantalizing remarks following changes now taking place in the Middle East and North Africa. About energy in general and oil in particular, it has some very interesting remarks.

Consider EA’s observation that, “the most likely commercial consequence is more expensive oil.” That says little. Nor does the reasoning behind it: “New and old regimes alike will want better terms and a better price.”

Everybody may want a better terms and a better price. They always do, and why not? But they won’t necessarily get one. Price depends on many factors beyond the wishes of sellers. One of them is demand.

When demand is up, the price is up. When demand is down, the price is down. These are the fluctuations that OPEC likes to even out, and with good reason since its members need price stability as much as anyone else does.

There’s no reason to think that outlook would change under any new regimes. Under OPEC, a change in regime makes no difference to the quota system. And the quota system is not going to fall apart any time soon.

“China, which has the money and an urgent demand, will need will do better in this contest than disparate indebted Western powers.” This is not telling us much. China has been in this position for much of the past decade, as have the Western powers.

“Industrial consumer countries need alternative energy faster than the means to produce them can be built. They also need them on a scale that green alternatives cannot supply.” EA is on the right track here, as all the numbers show these days.

“Thus, it is likely that governments will try to fast track nuclear energy programs (as they did in Italy) and that they will be resisted (as they were in Italy),” EA says. This looks to be a reasonable thought, too (though possibly apart from those comments about Italy).

A good many governments – in the West, the Middle East and East Asia – all express a need for nuclear power. But that is no reason to believe that Middle Eastern oil producers will be abandoning their central commodity any time soon.

It’ll be a long time before those plug-in electric cars become widespread. In China, the Jaguar Car Co. has found its third largest market – and it’s growing. Jaguar does have a plug-in concept car, the C-X75. But it's a long way from production.

Changes now taking place in the Middle East and North Africa will not alter the fact that demand for oil is rising in the Far East, with much of the anticipated growth coming from increased consumer demand for automobiles. Muscle cars, actually.

That's a market (and an income stream) that no oil producer would wish to miss out on nor, for that matter, would any resource nationalist.

Contact Eric Watkins at hippalus@yahoo.com
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