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Oil trade and international relations

December 20, 2012

The fact that oil trade has an influence on international relations is a self-evident truism.  However, just how those influences work – and in which directions – are often mysterious and frequently subject to change.  Two energy fellows at the Council on Foreign Relations (Michale Levi and Blake Clayton have published a data driven study on the vagaries of these relationships   Levi and Clayton conclude that, with the general liberalization of trade and the success of globalization, the influence of oil on international affairs has lessened.  However, they warn that this could be a temporary situation, due to an unusual confluence of events.  Indeed, the  tightening of supply envisioned by Peak Oil theorists would drastically change that situation; so, too, would projections of a world awash in oil, led by a resurgence of North American production.  I recommend their article, although I think it is a bit Pollyanna-ish:  energy in general and oil in particular are critical components to the modern world economy, and any change – real or perceived – in the availability of oil will have profound changes in international relations and geopolitical considerations, regardless of how the influence has seemingly waned.

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