Abstract

Two alternative schools of thought exist with regard to how the supply and pricing of energy commodities will respond to the current global economic downturn: Energy prices will fall as economies cannot sustain demand. Energy prices will hold, or continue to rise, despite the economic downturn due to a relatively inelastic demand for most energy commodities within developed and developing economies. We suggest a third alternative -- that supply and price of energy is being, and will continue to be, gamed within pockets of the global economy. If these marketplace manipulations go unfettered, we face a potential “domino effect” of global risk implications: Create a short-term shift in economic power from a handful of developed, service economies to a handful of developing, manufacturing economies; Create political and social turmoil in economies that suffer from this shift; and Further complicate the already-complex problems of political risk assessment, mitigation and financing since pockets of political risk (bribery, terrorism, war) could be expected to increase in number and geographic diversity as a result of the turmoil.