Oil

Home The government spent days announcing how the Autumn Statement would allocate funds. ‘Frontline’ parts of the National Health Service would get an extra £2 billion for the time being, £750 million of it diverted from elsewhere in the Department of Health budget. Another £1.1 billion from bankers’ fines would go to support GPs. Labour said it would give the NHS twice as much. Out of the £15 billion already set aside by the government for roads, a tunnel would be built for the A303 past Stonehenge. Of £2.3 billion (over six years) earmarked for flood prevention, only £4.3 million was set aside for the Somerset Levels, but £196 million for the Thames estuary.

Home The Commons, having been specially recalled, passed, by 524 votes to 43, a motion supporting ‘the use of UK air strikes to support Iraqi, including Kurdish, security forces’ efforts against Isil in Iraq’. Only after four days did RAF Tornados from Akrotiri in Cyprus find some targets in Iraq to bomb. In support of her contention that Isil’s ‘hateful ideology has nothing to do with Islam’, Theresa May, the Home Secretary, in a well-received speech at the Conservative party conference, quoted the Qu’ran: ‘Let there be no compulsion in religion’ (Sura 2:256).

Four years ago, I wrote that I knew no dark rumours about Santander, the rising force in UK high street banking, but that history taught me banks which expand rapidly and globally ‘always come unstuck in the end… partly because the challenge of risk control across such vast portfolios becomes impossible… Banks that have been driven by one powerful personality also tend to lose management grip, and start finding skeletons in cupboards, as the big man comes to the end of his tenure.’ The big man in question was third-generation chairman Emilio Botín — who died in post last week, aged 79.

Is international conflict really just a fight over oil? It sometimes seems that way. In Syria and Iraq, the militants of the so-called ‘Islamic State’ sell captured oil while battling to establish a puritanical Sunni theo-cracy. From Central Asia to Ukraine, Russia is contesting attempts (backed by the US) to minimise Europe’s dependence on Russian oil and natural gas. Meanwhile, Obama’s ‘pivot to Asia’ allows the US to threaten the choke points through which most of China’s oil imports must pass. Conspiracy-mongering petrodeterminists who try to reduce world politics to nothing but a clash for oil are too crude (pun intended). No shadowy cabal of oil company executives pulls the strings of world politics.

‘Iraq turmoil sends crude oil prices to nine-month high’ is the sort of headline that used to send shivers down economists’ spines, especially if it appeared on the same page as ‘Europe faces gas shortage as Russia cuts Ukraine supply’. How worried should we be at the current turn of events in the energy world? Since Iraq’s new insurgency kicked off, the price of a barrel of Brent Crude has blipped from $105 to $115 — nothing to panic about — but the more pessimistic analysts are talking of a further $30 rise if Iraqi oil flows of 3.6 million barrels a day (representing about 4 per cent of global demand) are seriously disrupted.