Assault rifles replace swords, grenade launchers replace cannons, GPS systems replace maps, and gold is replaced by oil for the modern-day Somalian pirates who recently hijacked a Saudi oil tanker, reports an article by Associated Press. The article states that the tanker was attacked 450 nautical miles from Kenya, is the length of an aircraft carrier and can carry up to 2 million barrels of oil. If the tanker is fully loaded, the crude oil can be worth up to $100 million. This attack on the Sirius Star comes in the wake of the August capture of the Faina, which is still being held for ransom by the pirates. The article highlights the severity of Somalian piracy, “With most attacks ending with million-dollar payouts, piracy is considered the biggest moneymaker in Somalia, a country that has had no stable government for decades. A report last month by the London-based think tank Chatham House said pirates raked in up to $30 million in ransoms this year alone.”    

The point is that hijackings like these can affect the global oil industry by bringing an uncertainty to the market. Modeling a different scenario, The Heritage Foundation’s Center for Data Analysis recently published a report called “The Global Response to a Terror-Generated Energy Crisis”, which highlights potential effects on the world’s oil industry following a major terrorist attack on Saudi Arabia’s oil exports. The two main effects on the U.S. economy during this exercise were: “The price of petroleum in the U.S. spiked very quickly from the price of $127 per barrel on the day of the game to a high of $244 per barrel just days later. This price increase caused a rapid slowing of the U.S. economy, seen in a drop in employment of approximately 1.5 million jobs in the first year and an average drop in inflation-adjusted gross domestic product (GDP) in the first year of $119 billion.” If piracy reaches the point where it impedes the transport of oil, could the consequences be so dire?  We can hope not to find out, but should plan in case we do.