My friends love cheap gas, and I love not hearing them whine about high gas prices. The current global economic downturn may create cheaper prices at the pump, but there are two unintended consequences of inexpensive crude.
First, capital investment in new capacity (ie the ability to explore, drill, extract and transport fossil fuels) greatly decreases, which is the topic of this post at MEMRIBlog. When industry members pull back from improving or replacing current capacity now the chances for the industry to respond to an inevitable upswing in demand greatly decreases. It makes it almost inevitable that when the price does go up with demand it will be even higher then the previous surge.
Another consequence, less understood, will be the inevitable rise in a new generation of Gulf-based jihadis. Despite popular myths regarding who actually joins the global jihadist movement, it is precisely the bored, educated middle class kid, who is targeted for recruitment. With a significant economic downturn in the regopn, these kids will have no job prospects. Some will seek jihad in any number of today's active fronts.
Terrorist activity is a lagging indicator of global economic stability. During the global energy malaise of the 1990s we saw a great influx of young, educated, mostly middle class men, seeking jihad action in any number of regional conflicts, like Kashmir and Afghanistan. Those young men became very dangerous to US interests in the early 00's.
Now there appears to be a perfect storm of circumstances that could be a another breeding ground for terrorism. The economic downturn will leave many young Gulf men -- just now coming of age -- unemployed, and thus with the incentive to join the global jihad. A protracted situation in Afghanistan and Pakistan will no doubt attract many young men interested in the training and, quite frankly, looking for a little adventure. Add to that the inconsistent and almost half-hearted approach to managing a counter-jihad message, and you have a toxic mix that will inevitably produce more young jihadis, not less. We probably won't feel the affects of this young generation for at least five years, perhaps a decade, but there will be effects, much like September 11th itself.