By Dan Steinbock
When Thomas Friedman published his bestseller The World Is Flat in 2005, it portrayed a new world of global markets where historical, regional and geographical divisions are becoming increasingly irrelevant.
It was a very different world. US productivity still seemed relatively solid and global growth was strong.
The price of oil did climb from $10 to $95 between 1999 and 2007, but this did not have an adverse impact on global growth. Things changed this year. When the price of oil soared to $140, many saw the increases as a harbinger of a new energy shock.
On the eve of the US Independence Day, crude oil rose to a record above $145 a barrel. Goldman Sachs, Wall Street's famed investment bank, expects oil to hit $200 in the next six to 24 months.
Western analysts often attribute price hikes to the rapidly-rising demand from China and India. Yet, the struggle for energy resources has been a reality since the early 1970s.
US critics argue that the price of the dollar-denominated crude oil has been driven up in the aftermath of the War in Iraq and by the low dollar.
Politics aside, prices are ultimately driven by a classic imbalance in supply and demand. As demand is escalating and energy alternatives remain few and costly, the upward trend of oil prices has come to stay.
