We are worringly returning to dependency on Middle Eastern oil
Falling oil prices prompt greater demand as importing countries reverse the behavioural changes caused by higher oil costs. People travel more, care less about the economy of the car they buy and generally give less of a stuff about using petrol and diesel.
The downside to this, as set out in this report by the IEA, is that we are returning to dependency on Middle Eastern oil. OPEC’s share of the world oil market is now back to where it was in the 1970s, something which should really worry western oil importers such as the UK. OPEC has always been quick to take advantage of market dominance and there is no reason to suspect that it won’t behave differently once it feels that its market position is sufficiently strong.
The Middle East’s largest oil exporters - Saudi Arabia and Iraq - are beset by political and religious upheaval. Some experts on the region are suggesting that the Kingdom of Saudi Arabia faces an existential threat from the internal pressures building among its restive native population and the oil-rich Shia regions. Iraq remains a political basket case, beset on one side by the tyranny of ISIS and on the other by the manoeuvring of Iran which never misses an opportunity to stir the Shia majority. These aren’t the sort of places on which we should be dependent for oil.
One way to remove this dependency is to drive electric cars; as the UK’s domestic oil production dwindles, our imports grow, increasing our trade deficit and creating a risk to the economy from an oil supply shock. We have been here before. EVs use electricity generated in this country, increasingly from the sun and the wind. We would also have cleaner air for our children to breathe and we would pay a whole lot less to the government in the form of fuel duty.
We reckon that’s a win win.