While the West trembled in the face of the first oil price shock, considerably higher prices are meanwhile accepted as “normal.”
When the price of oil rose above $100 per barrel, the world was in an uproar about crossing this psychologically important mark. The anxious question was whether the global economy could withstand such a high price. About three-fourths of a year later, the answer to that was obsolete. The bankruptcy of the U.S. bank Lehman Brothers and the economic crisis it unleashed pushed the need for oil, and thus its price, far down. Seen in retrospect, the rapid rise the summer before was part of a worldwide bubble that burst with a loud bang in September 2008.
Since that time, however, the price of oil has again increased sharply and has now stood for more than a year over that once-feared threshold of $100 per barrel. This time, too, the reason for that could be a bubble, whose bang — should it ever burst — might well considerably exceed that of 2008. According to many experts, the price of oil is not actually rising, but rather the value of money is sinking. The reason for that is the starting up of the printing presses of the issue banks in Europe and the United States. Added to that is the concern about the blocking of the Strait of Hormuz — the “aorta” of the oil trade — as a consequence of a possible war against Iran.
Whatever the reasons for the recent rise in prices, consumers and the economy must live with them. They have been doing that extremely well up to now. Economically, 2011 was an extremely good year in spite of oil prices fluctuating between $100 and $120 per barrel. In many places, it was an absolute record year for the auto industry. No comparison, therefore, to the '70s, when the first oil price shock sent the world economy into its first crisis since World War II.
Naturally, consumers’ faces regularly turn red with rage at the sight of the pump. This is especially true in the U.S., where the price of gas virtually represents the barometer of public well-being in the face of a broad lack of public transportation. This psychological appearance, however, is deceiving. Fuel has never been as easily affordable for the general public as it is today. According to calculations of the Austrian Insitute of Economic Research, WIFO, an industrial worker in 1980 still had to work 7.6 minutes for a liter of super gas; in November 2011 it was only 5.6 minutes. Added to that is the fact that cars, while becoming bigger, more powerful and safer, use considerably less fuel today than 30 years ago.
Industry has shown a similar development. Thus, economic growth has slowly unlinked itself from energy use. Furthermore, the importance of oil in the energy mix of the industrialized nations has decreased since the '70s. As a result of all this, a higher oil price no longer automatically brings on a world economic crisis.
And a second fear from the time of the first oil shock, that of the limited supply of black gold, has meanwhile turned out to be unfounded. While the Club of Rome prognosticated that the global oil reserves would stand at 600 billion barrels, about 900 billion barrels have been produced. The protected reserves stand at nearly 1.4 billion barrels and continue to rise every year.
A higher oil price makes possible production methods that have been considered too complex or too expensive up to now. This might also push back the importance of the supplying countries in the intermediate term. The largest deposits of the so-called unconventional oil in the form of oil shale are located in the U.S. They are about three times as large as the reserves in Saudi Arabia.
The really limiting factor in the use of fossil resources may be the concentration of CO2 in the atmosphere and the connected climate goals. The higher oil prices could have an effect here as well: The more expensive black gold is, the more attractive a more efficient handling or its replacement by renewable alternatives becomes.