The American public's deep-rooted fear that any disruption of Middle Eastern oil supplies could trigger a U.S. recession is historically based: Past recessions have been caused or accelerated by such crises. Contrary to received wisdom, however, the chance of an oil crisis has decreased substantially since the 1970s due to a paradigm shift in global oil security that has gone largely unnoticed.

Paradigm Shift: The End of Oil Supply Crises?

By , , Briefing

In the most recent presidential debate, Republican nominee Mitt Romney attempted to tap into a deep-rooted fear among the American public of instability in the Middle East, and in particular the concern that any resulting oil supply disruption would spike oil prices and trigger a recession.

The concern is historically based: Past recessions have been caused or accelerated by such crises, including the 1973 oil embargo, the 1979 Iranian revolution and the 1980 outbreak of the Iran-Iraq war. Contrary to received wisdom, however, the chance of an oil crisis caused by a hard-to-manage oil disruption has decreased substantially since the 1970s. Indeed, we may well be experiencing a paradigm shift in global oil security that has gone largely unnoticed and that it is built on a number of shock absorbers -- some emanating from the Middle East itself. ...

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