Oil: Too Important; Too Slippery

Foreign Policy has an entire package on the past, present, and future of oil. The capstone is an essay by Daniel Yergen about how oil has changed in the past few decades. Chief among the changes is the commodity's new volatility.

These wild swings don't just affect the "hedgers" (oil producers, airlines, heating oil dealers, etc.) and the "speculators," the financial players. They show up in the changing prices at the gasoline station. They stir political passions and feed consumers' suspicions. Volatility also makes it more difficult to plan future energy investments, whether in oil and gas or in renewable and alternative fuels. And it can have a cataclysmic impact on the world economy. After all, Detroit was knocked flat on its back by what happened at the gasoline pump in 2007 and 2008 even before the credit crisis. The enormous impact of these swings is why British Prime Minister Gordon Brown and French President Nicolas Sarkozy were recently moved to call for a global solution to "destructive volatility." But, they were forced to add, "There are no easy solutions.

Click here to read the rest of Yergin's essay, or here to see FP's entire report.