Oil and Gasoline

Oil and Gasoline

In 1999, the price of oil hovered around $16 a barrel. In July 2008, it reached a peak of $147 a barrel. In the months that followed, as fears of a global recession grew, prices plunged to the $75 a barrel range, a roller coaster ride that left both producers and consumers confused and wrung out. Prices were still far higher than they had been a few years earlier, but oil-producing countries that had reshaped their economies around the huge influx of revenues faced a suddenly altered landscape.
Many factors contributed to the long buildup between 1999 and 2008, including the relentless growth of the economies of China and India and widespread instability in oil-producing regions, including Iraq and Nigeria's delta region. The triple-digit oil prices that followed appeared to redraw the economic and political map of the world, challenging some old notions of power. Oil-rich nations made enjoying historic gains and opportunities, while major importers — including China and India, home to a third of the world's population — confronted rising economic and social costs.
Managing this new order became a central problem of global politics. Countries that need oil clawed at each other to lock up scarce supplies, and were willing to deal with any government, no matter how unsavory, to do it.
In many poor nations with oil, much of the proceeds were lost to corruption, depriving these countries of their best hope for development. And oil fueled gargantuan investment funds run by foreign governments, which some in the West see as a new threat.
Countries like Russia, Venezuela and Iran that were flush with rising oil revenue saw that change reflected in newly aggressive foreign policies. But some unexpected countries reaped benefits, as well as costs, from higher prices. Consider Germany. Although it imports virtually all its oil, it has prospered from extensive trade with a booming Russia and the Middle East. German exports to Russia grew 128 percent from 2001 to 2006.
The high price of gas became an important issue in the presidential campaign. Senator John McCain in particular made energy a focus, proposing to suspend the gas tax during the summer. He also made fervent calls to expand domestic drilling for oil, while his opponent, Barack Obama, emphasized the need for alternative fuels.
The surge in prices hit automakers hard, as sales of the truck-based models that had been Detroit's most profitable product dropped sharply. Mass transit systems across the country reported a sharp increase in riders. As prices fell in the fall, the question facing Opec and car makers alike was whether those shifts would reverse, as they had in previous downturns, or whether a tipping point had been reached.