Why Oil Wealth Fuels Conflict

From Real Clear Politics:

The world is far more peaceful today than it was 15 years ago. There were 17 major civil wars -- with "major" meaning the kind that kill more than a thousand people a year -- going on at the end of the Cold War; by 2006, there were just five. During that period, the number of smaller conflicts also fell, from 33 to 27.

Despite this trend, there has been no drop in the number of wars in countries that produce oil. The main reason is that oil wealth often wreaks havoc on a country's economy and politics, makes it easier for insurgents to fund their rebellions, and aggravates ethnic grievances. Today, with violence falling in general, oil-producing states make up a growing fraction of the world's conflict-ridden countries. They now host about a third of the world's civil wars, both large and small, up from one-fifth in 1992. According to some, the U.S.-led invasion of Iraq shows that oil breeds conflict between countries, but the more widespread problem is that it breeds conflict within them.

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My Comment: Oil broke the $126.00 US barrier today. The political culture of many oil producing countries will not permit them to adopt Western Government strategies and policies when it comes to their oil wealth and cash flow. This in the short to medium term will result in lesser oil production, higher prices, and a search for alternative supplies and energy sources.

The real problem will arise when oil prices start to collapse .... which historically has always happened when the price of oil has increased as substantially as it has in the past two years. Countries such as Russia, Venezuela, Iran, and Mexico are heavily dependent for most of their revenues from oil royalties and earnings. Any disruption in this flow of funds will bring about turmoil, collapse of government price supports for basic staples, and an atmosphere of blame and finger pointing.