Still Stuck over a Barrel

A new warning that the global energy crisis is far from finished

The nightmare is both grim and grimly plausible. A ruinous new energy crisis once again doubles or triples oil prices. Economies are battered, and governments around the world topple. In the U.S., business goes into a slump that can be compared only with the Great Depression.

That chilling prospect is one of the possibilities foreseen in Global Insecurity: A Strategy for Energy & Economic Renewal (Houghton Mifflin; 427 pages; $15.95), a sometimes frightening, but still generally hopeful, survey of the energy outlook published last week. The book, which is edited by Political Scientist Daniel Yergin of Harvard University and Martin Hillenbrand, director of the Atlantic Institute for International Affairs in Paris, was prepared during the past four years by a group of mostly academic contributors from the U.S., Western Europe and Japan. They included: Teruyasu Murakami, a senior consultant at the Nomura Research Institute in Japan; Ian Smart, a private British energy consultant; and Althea Duersten, a senior economist at the World Bank.

Yergin, co-author of the 1979 bestseller Energy Future and contributor of two of the twelve essays in this volume, warns that a devastating energy crisis could erupt at any time. He writes: "That, in a nub, is the problem for the United States and the entire industrial world, and is why we have undertaken this study." Yer gin fears that the current small glut in perils supplies will lull industrialized countries into the type of complacency that leads U.S. auto buyers to want to rush back to big cars as soon as gas prices seem to abate.

Global Insecurity insists that oil shocks are likely to occur as long as consuming nations remain addicted to petroleum from the explosive Middle East, which has some 60% of the non-Communist world's known oil reserves and which ships 65% of the crude involved in international trade. Any type of conflict in the area could disrupt the flow of oil and plunge the world into a crisis.

Middle East upheavals, of course, remain a constant threat, as evidenced by Iran's invasion of Iraq last week. Arab ministers last month considered using their so-called oil weapon to pressure the U.S. and Israel over the fighting in Lebanon, although they ultimately took no action. Turmoil ranging from the fall of a key government like that of Saudi Arabia to the expansion of Soviet influence in the region could also shut off supplies.

Some analysts were nervously wondering whether Iran's invasion of Iraq would reduce oil shipments, thus drying up the remains of the petroglut and pushing prices higher. Most experts, though, felt that the war is unlikely to trigger an immediate crisis because the global economic slump continues to hold down energy use. But the energy situation will again become dangerous once world economies start growing. Writes Yergin: "The more likely flash point occurs when accidents interact with a market in which demand is rising, as was discovered in 1973 and 1979. Thus, the world enters the danger zone when economic activity and energy demands are on the upswing."