Addis Abeba — From Adolf Hitler's second world war to Tom Clancy's fictitious third World War, oil was central. Hitler aimed to win the war by seizing the Caucasus oil fields; Mr Clancy had his characters decide to start a world war in order to rob the Middle East of its oil and assuage the unexpected shortfall in their own oil production, a strategic weakness in favour of their cold war foe, the United States. Oil is a real fuel- it lights; it burns; it provides inputs for medicines, cosmetics, and plastics; it powers our vehicles and factories, and it ignites our conflicts.

Oil lay on the surface of America's backyard. People collected it unenthusiastically by skimming or by soaking cloth with it mostly to use it as medicine. Don't our street boys sniff benzene to alleviate their hunger? Rock oil, as it was called in its early days, would have continued being harvested and used in the traditional way, had it not been for the foresight of an astute American business man, George Bisselle, who, supported by the research of the most famous chemist of the day, Benjamin Silliman, went on to establish the Pennsylvania Rock Oil Company in the 1850s. Illumination and lubrication would be the new uses of oil. Oil had been seeping to the surface of mother earth for nearly 5,000 years before these men started the process which would make it the kingmaker of the world.

The first gush that left everyone awestruck was achieved by Seneca Oil Company, formed shortly after Pennsylvania, on the unforgettable day of Sunday, August 28, 1859. The company had drilled only 21 metres, and, so much oil was obtained there were not enough containers for it: all tubs, wash basins, barrels they could lay hands on were filled and were not enough. They had to chop down trees and make large tubs. The oil rush had begun.

In 1861 there was too much oil production (three million barrels) for the American market to do anything about. Between the beginning and end of that year, the price of oil had tumbled from 10 dollars a barrel to an unbelievable 10 cents. This dirt cheap price paid off by creating a big market.

Over the years that followed many people made themselves powerful and wealthy by investing in oil. John D. Rockefeller, the iconic symbol of capitalism, was one of the earliest. (Standard Oil Company, which Rockefeller had founded with partners in 1865, crumbled under anti-trust suit, and was broken down to companies later known as Exxon, Mobil, Chevron and others in 1911.) The quest for oil would become global with the Middle East as the main target, although eventually every continent would end up having a few oil rich nations. Today at least 50 countries are proven to have this resource. Others are avidly searching for it beneath their surfaces.

In those early days the challenge for petroleum production and distribution was its limited use. Kerosene was the major product, and it was used to light houses. As kerosene began losing its market to Thomas Edison's magical electric light, Henry Ford brought a relief to the oil industry by offering the world its first motor car in 1896.

Oil had to wait for a major destructive war in the form of the First World War to become a highly valued strategic commodity. That was when mechanized warfare had started for real, and shown leaders its strong dependence on oil. The Second World War would have ended sooner, and probably several million people would have lived, if the Allied forces were not severely short of oil.

Arab nations had not waited long when they learned that their oil was their deadliest weapon. As early as the 1950s they had wanted to use it for strategic purposes, only the lack of rapport among them helped prevent that. The first major embargo by Arab countries was on June 6, 1967, the second day of the Arab-Israeli war; on the first day Israel had destroyed all "enemy" air forces in a pre-emptive attack. The embargo targeted the USA, UK, and West Germany for their friendliness towards Israel. It lasted over a month with the real losers being the Arabs themselves (in the form of lost revenue) as non-Arab sources supplied these markets.

The Arabs and Israelis engaged each other for a fourth time since 1948 in October 1973. That year something big had occurred in the oil business: the United States' dependence on Middle Eastern oil had become a reality, 12 years earlier than had been predicted. The Arabs, who had already been incensed by two devaluations of the dollar, which reduced the value of their dollar reserves, took opportunity of the confirmed US dependence on their oil and wanted to influence American policy on Israel. They cut all supplies to the US and a number of other countries, and reduced the amount they produced. A number of embargos and crises have occurred before and since then, including one against an oil producing country, Iraq, which was widely condemned when it invaded its weak but oil-rich neighbour, Kuwait.

The risks involved in oil dependence have encouraged strategic reserve holdings (the Unites States has 700 million barrels). The permanent challenge however is the ever growing demand for the staff. By 2010 the planet's oil demand is predicted to reach 89 million barrels a day, up from 76 million in 2000. About 75% of the additional demand will originate from developing countries such as Ethiopia, although the lion's share of the demand will be from the larger and faster growing economies such as India and China. This is because population growth and rapid economic development.

Africa, although expected to sustain a lot of damage from the global recession, is still reporting a better growth than many parts of the world, which means that it will require more oil to fuel its economy.

Ethiopia's economy had been registering double digit growth over the past few years. With all the problems in the global economy, Ethiopia's latest growth rate is 6.5%, although the government claims one more double digit growth. This growth (plus the country's protracted inability to supply adequate electric power means that Ethiopia has to consume more oil, burning 70% of its the hard currency it gets from export. In the first three quarters of the 2008/09 fiscal year, the government spent nearly 10.6 billion Birr to import 1.45 million metric tonnes of oil, up from 10.1 billion Birr and 1.37 million metric tonnes for the same period last year. The reasons are almost the same for every other developing country: increased construction work, growing demand for power supply, and higher mobility of people.

The crazy spike in oil prices last years, although it failed to reach the 200 dollar mark, has prompted an increased search for more oil. Countries are prospecting and digging more, even as more and more wells are going dry. Even Ethiopia reports the presence of crude oil in its territory, and a number of international companies have taken prospecting licenses from the government. Globally there is concern about the future of oil dependence: many countries are unhappy about taking prices set by the producers, some grumble to see oil used as weapon. The more important reason, however, is that the supply is limited and dwindling. (England has become a net importer of oil after the near drying of the North Sea wells in recent years.) The supply by OPEC and non-OPEC countries between 2010 and 2020 will be 90 million barrels a day to 100 million barrels a day. The planet's remaining oil reserve of one trillion barrels is expected to be finished in 40 years. What will happen then?

The work on alternative energy sources and fuel efficient products is gradually heating. Hybrid automobiles are rolling on the streets, alcohol is sharing a tank with benzene; there are also encouraging results in bio fuels, synthetic oil, liquefied natural gas and solar panels. For the time being investment in clean technologies seems to pick as oil prices peak. But the general direction is clear, and there may be no turning back. At least one Arab nation seems to desire to get on board. The United Arab Emirates is rallying support for its bid to become the seat of the International Agency for Renewable Energy.