Price of Oil May Rise Due to Scale of Georgian Conflict

"Price of oil rises on troubles in Georgia..."

The headline is a sign of our time. Today, the world believes in money. In economics. In material progress. Everything else takes second, third, or fourth place. It is easier to see small changes in the price of oil than big changes in the way you look at the world. You can tell when the world changes; but when you change it goes unnoticed.

If this were August 1914, instead of August 2008, the headlines might read:

"French Bonds Fall on Invasion of Belgium." Or, if this were August of 1939, the headline might read: "Oil price jumps on threatened German invasion of Poland."

Or how would the modern press report the big event of 2000 years ago? "Miracle worker's earnings cut short by untimely crucifixion..."

But in years zero, '14 and '39, money was not the main issue. People believed in politics, nationalism, racism, religion...and reported the news otherwise.

Today, it is money that counts.

The price of oil fell heavily last week. It ended Friday at $115. But this morning, it is rising - on news of a political struggle in South Ossetia. And if this continues, we wouldn't count on the price to stay 'low' for long. The only good news is that when energy is under the gun, the soaring oil price itself opens you up to all kinds of soaring investments.

The region is between Russia and Georgia, on the Black Sea. Ossetians, whoever they are, have been there since the days when the ancient Greeks set up colonies around the Black Sea. In the 1930s, the Pontic Greeks were still there - until Stalin deported them to Kazakhstan. The Ossetians, too, disappeared into the maul of the Soviet Union. They were forgotten for most of the 20th century. Then, when the Soviet Union disbanded - there they were. But who then had the right to tell the Ossetians what to do? The Russians? Or the Georgians? The Russians expressed themselves on the issue over the weekend. According to one report, 2,000 people have died in the fighting.

U.S. Vice President, Dick Cheney, had Georgia on his mind over the weekend. He reportedly said that this violence "must not go unanswered." What sort of response he had in mind, we don't know. But inasmuch as the United States and Russia are the world's two most heavily armed nuclear powers, there may be more at stake than the price of oil.

Bill Bonner
The Daily Reckoning Australia

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