The buffer of surplus oil production in the world has been cut in half in the last year as prosperity in Asia, Europe and the United States has increased demand for fuel. Thus Saddam Hussein, once again making threatening moves on Kuwait and Saudi Arabia, has leverage over the world's economies. The new energy problem did not arise overnight. Relatively low prices for oil and gas in recent years caused a worldwide downturn in investment for new sources of fuel, says Joseph Stanislaw, president of Cambridge Energy Research. With little or no new supplies being developed, and demand rising as Asia's economies recovered from recession, today's tight-supply situation was inevitable.
High prices are unlikely to be temporary, however.
Though investments in developing new oil and gas production in the Gulf of Mexico and off West Africa have been increasing, it will take two to three years to bring new supplies to market. The new ranges for crude oil could translate into hikes of 20 to 50 cents a gallon in prices for gasoline and other fuels. The consequences will be a shift to concern over energy prices again for consumers and for business. And development of new kinds of energy delivery, through fuel cells, solar power and other means, will be revived and accelerated. But developments of new energy systems will take most of the decade.