The hydrogen challenge to Arab oil has it’s pitfalls

World oil prices continue to soar – driven by the continuing power struggle in Iraq, by fears for the solvency of the Russian oil giant Yukos, and by surging demand for oil in Asia, notably in China. Even President Hugo Chavez’s convincing victory in Venezuela on August 15 — and his pledge to continue supplying the United States with 1.5 million barrels daily in spite of his political differences with Washington — has not checked the upward trend.

Some observers predict that oil prices could soon break through the $50 a barrel ceiling. But, they add, there is no need to panic. In real terms, oil prices are still only about half the level reached in 1979!

High oil prices, however, have some immediate consequences. They check the rate of growth of industrial economies, and might even trigger a recession; they stimulate the search for alternative sources of energy; and they pump money into Arab pockets.

The British weekly The Economist has estimated that ‘With oil prices at their highest level in two decades, revenues of $600 million a day are gushing into the Gulf, double the volume during the 1990s. The monarchies of the Gulf Cooperation Council are alone likely to earn $35 billion more from oil exports this year than last