Oil prices intend to wreak havoc on the world economy. This spark has been in the Middle East lately. In recent history, the spark came “from the Arab oil embargo of 1973, the Iranian revolution of 1978-1979 and Saddam Hussein's invasion of Kuwait in 1990…” (Economist). “The Middle East and North Africa produce more than a third of the world's oil.” (Economist). The situation in Libya is getting worse, which is causing Libya's oil production to halve. Unrest is spreading across the region, threatening broader upheaval. The price of Brent crude oil rose 15%, reaching $120 a barrel on February 24. (Economist). Supply disruptions cause oil prices to rise and could increase inflation. The lasting effects could lead to an increased need for oil substitutes. The companies that run the oil business are oligopolistic. Oligopolistic firms are few but generally large and control the sector. They intend to have strong pricing power and create a difficult barrier against newcomers. For oil oligopolistic companies, business is going very well because in the 20th century and so far in the 21st century, the world runs on oil through heavy dependence, with almost no successful substitutes. Oligopolistic companies in this industry almost never have to worry about potential entries as it is estimated that starting an oil business cost around $50,000 in the 19th century, but now, in the 21st century, millions of dollars will be needed. Consumers and businesses have an almost inextricable dependence on oil for their needs. Demand is inelastic. Oil prices could rise or fall slightly and no one will really notice the difference between demand gains or losses. Once again, demand is inelastic because the... middle of the paper ...is about to close. In the long term, regarding the Libyan crisis, oil substitutes are expected to become more and more preferred by consumers. Oil companies may recognize this as a threat to their oligopolistic activities. They could take on more of the burden to keep prices as low as possible and prolong the rise of efficient and effective substitutes for oil. Companies may realize that the occurrence of oil increases suggests they need to create a subdivision within their companies (similar to Scion for Toyota automobiles) in order to develop substitutes to make their companies more secure in the financial future . "Oil and the economy: the oil shock of 2011 | The Economist." The Economist - World news, politics, economics, business and finance. Economist.com, March 3, 2011. Web. March 11. 2011..