Oil: History and Politics

Oil is the natural resource that has shifted the balance of the world. Many economists – and Governments and their advisers – divide the recent past into pre-OPEC and post-OPEC, the years before and after the huge rises in the international price of oil.

Suddenly, it seemed that the producers of cheap oil had the whole world over a barrel. As a natural source of energy, oil, like coal and natural gas, is where it is because of geology – and the cheapest sources of it are concentrated in a small number of countries.

At first demand for oil – as kerosene for cheap lighting – was slight and certainly the possession of oil reserves gave no country or Government any significant power or influence.

Two inventions began to shift the balance – the internal combustion engine, to power increasing millions of cars in the rich industrialised countries of the West, and the conversion of the world's navies from coal to oil. Oil was now a strategic resource – Governments could hardly ignore the security of their supplies.