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 enjoyed historic gains and opportunities,
whereas 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 their 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, whereas his
opponent, Barack Obama, emphasized the need for
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.