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JES: The Relationship Between Energy Infrastructure Attacks and Crude Oil Prices

Authors: Jennifer Giroux, and Caroline Hilpert
October 27, 2009

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This Journal of Energy Security article reviews the changing energy security environment and the effect of energy infrastructure attacks on crude oil pricing.

In  December 2005, a video statement was aired on Al-Jazeera in which Ayman al-Zawahiri called for attacks aimed at oil facilities in the Middle East. In response, crude oil prices rose by nearly US $1. This incident is but one example in recent years when the oil market has responded to threats to energy infrastructure (EI) by increasing oil prices. While a dollar increase does not seem alarming, it becomes more concerning when one considers that every dollar-per-barrel increase costs the United States economy a reported $4 billion a year, according to Gal Luft at the Institute for the Analysis of Global Security. More specifically, this example calls attention to how violent non-state actors (VNSA) are able to leverage oil market dynamics and harvest a global public relations platform by targeting EI. Capitalizing on modern energy security and crude oil market characteristics, today's VNSA operating in oil and gas producing and/or transit regions are quickly learning that attacks aimed at EI can not only be an effective way to target state and international energy assets, cause economic damages, and garner broad media attention, but also a way to effect global turbulence in the form of oil market volatility. Hence, these micro-actors are functioning in an environment that enables them to become global players.

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