Jaded Sage:

Oil prices have put energy front and center on the world’s stage. As record prices continue week after week, day after day the confrontation with an energy present and future are on the minds and mouths of many.

In Europe oil protests erupted this week. Truckers in London blocked a major artery into the capital on Tuesday. They are putting pressure on PM Gordon Brown to act. Diesel runs at more than $9.00 a gallon there and unleaded gas costs $8.61. The British impose a $3.77 a gallon fuel duty and a 17.5% on top of that. This policy was intended to increase the use of pubic transportation. Many in England these days are questioning the taxes in the wake of surging gas prices.

In France, farmers and fishermen have been protesting for two weeks. They have blocked access to fuel refineries in several locations to display their anger at rising oil prices.

Countries on the edge of poverty such as Mongolia face crippling decisions. People in the harsh climate there are facing decisions between starving or staying warm. As food prices and energy costs run along parallel lines, these decisions aren’t always an either or proposition. In Indonesia rising oil prices have caused riots forcing the government there to subsidize energy costs to prevent an economic collapse.

Since we are dealing with an international crisis there is very little a single nation can do, especially those in the Third World.

Interestingly (and economically viable) the major Western nations are seeing a reduction of demand as oil prices are causing a shift in energy habits. China however has chosen to heavily subsidize fuel prices until after the Olympics, resulting in steady fuel prices there. A billion disgruntled Chinese wouldn’t be a pretty picture for the world’s cameras, especially in combination with the aftermath of the earthquake that hit Sichuan earlier this month.

The price is rising at a much greater clip than normal supply and demand would warrant. OPEC in fact says that the rise is due in large part to oil speculators. OPEC claims there is plenty of oil but they are nearing capacity. Investors claim the surge in speculator activity is attributable to the decline in other sectors such as real estate. The speculators are merely looking for more profitable investments. Without the recent speculation gas would be closer to $50 or $60 a barrel as opposed to $130 a barrel as it sits today.

Whereas the 2004 US presidential election centered on the Iraq War and security, the 2008 version may well pivot on energy costs. $5.00 gas is on the horizon and many are frightened of the prospect this summer. And as we know fear is a powerful political tool.