Notions can be an indispensible force in the achievement of big leaps in business, science, sports, politics, personal fortune and military conquest. That's how souls among us have taken apart genomes, drilled in ultra-deep water, run the 4-minute mile, put a black man in the White House, earned a billion dollars, and overthrown Mubarak.

Sometimes notions and gigantic personalities combine, and the result can be a determination to go on, and on and on. Such is the case with missile defense. Three decades after Ronald Reagan visited Cheyenne Mountain and got the notion that the United States could shoot down a missile, the United States has spent more than $130 billion to prove the great man correct. In January, for example, the U.S. Missile Defense agency halted deliveries of the core weapon in the American-based system of ground-based interceptor missiles -- a Raytheon-made anti-missile device that failed yet again to hit a target. Yet, a week ago, Defense Secretary Robert Gates was in Moscow, attempting to fulfill one of President Obama's strategic priorities of the year -- getting a missile-defense deal with Russia -- and the Pentagon is asking for $10.6 billion on more development in its next budget.

One matter is the pure indomitability of Reagan's notion. The other is its indomitability in the context of events around the world -- 9/11, the wars in Iraq and Afghanistan, and now the revolutionary fervor in the petro-states of the Middle East. Are we fighting the proverbial last war? "In 1999, 2000, 2001, the Russians were saying, ‘Look you knuckleheads, the real threat is Osama bin Laden and the Taliban.' Then 9/11 happened and they look pretty right," Andrew Kuchins, who runs the Russia and Eurasia Program at the Center for Strategic and International Studies in Washington, told me over the phone.

The question is not whether the Pentagon ultimately will manage to figure out the missile conundrum -- this notion could yet prove itself out. Clay Dillow at Popular Science, for example, reports that Northrop Grumman has achieved a breakthrough with the ability to track a ballistic missile through all phases of flight. Poniblogger at CSIS has some interesting thoughts about missile defense progress.

It is rather whether Western military and security minds ought to be focused on how to adapt to a tectonically different Middle East, including how to secure the world's energy supply. It is whether it's best to continue what's now a 28-year-long effort to engage Russia on missile defense, or to shift the focus to a cooperative policy on energy, arguably a more enduringly strategic problem. It is also what to do about nuclear energy given Fukushima.

There's a presumption out there that things look tough in the Middle East, but that soon enough -- maybe by summer -- they will sort themselves out, and becalm the volatile prices of oil and gasoline. Not so, says veteran oil analyst Edward Morse, a student of history who correctly called the 2008 oil bubble while everyone else was still throwing money into the pot. "This is not a one-off disruption," Morse says. Instead, we're in a new age of geopolitical risk that threatens to disrupt the region for a decade or even longer.

As if to reinforce his point, 6,400 miles away in Libya, Col. Moammar Qaddafi has again triggered the all-important Flaming Oil Port Index by having his air force bomb the country's main oil terminal at Es Sider, turning it into a ball of fire. Oil prices shot up.

Given the Libyan uprising, not to mention the trouble in Bahrain, Egypt, Oman, Tunisia and Yemen, even the region's rich petro-states understand the basic math, says Morse -- their demographics (60 percent of the region's population under 25 years old, high unemployment rates, and lopsided income distribution), awakened by the kindling of revolutionary fever, have put all of them in potential jeopardy. "A rapid contagion is spreading," he said. "Even if you think you are relatively safe, this is a new, permanent risk. It will be with us for the next decade," or even two.

Therefore, all the petro-states are going to mimic the recent largesse of Saudi King Abdullah, who distributed $36 billion to his people in the form of higher wages and forgiven loans, and do so on a regular basis. They will also try to figure out how to put all those discontented and often well-educated youth to work.

That's great, but what does that mean for the rest of us? That the break-even point for annual government expenditures in all the states -- meaning the price of oil required to cover regular state obligations like salaries, road repair and defense, plus these new expenses in order to satisfy the restive youth -- has just gone up, says Morse. If they needed $60-a-barrel oil multiplied by the number of barrels they are producing and selling each day to fund the state budget, now they will need much higher prices. Saudi Arabia, Kuwait and other petro-statesmen that previously attempted to keep oil price stamped down to some degree can no longer be counted on to do so. Instead, they will be interested in the kind of price increases we are seeing today. For more Ed Morse, including a video, read on to the jump.

The Saudis' power to calm: We all know by now that oil prices have soared not specifically because of Libya, but because traders are worried about what happens next. In particular, they are worried about Saudi Arabia -- whether it can truly step up to the plate with big volumes of oil to compensate for a shortfall elsewhere, even if it itself falls victim to the unrest roiling the Middle East. To be more precise, the question on many lips is: Will or will not the Saudis announce an increase in oil production in order to calm roiling global markets? I discuss this topic today on the Brian Lehrer Show at WNYC.

The answer is that they may already have quietly done so.The Oil Daily is reporting today that Saudi Arabia has lifted production to 9 million barrels a day, which if accurate would be about 4 percent, or 400,000 barrels a day, higher than its most recent reported volume. That's a serious uptick in production -- sufficient, one would think, to persuade traders that the kingdom in fact possesses the capacity and will to tamp down market volatility when it's called for. It should be sufficient to lower prices well into the low $90-a-barrel range. It should be, that is, if the Saudis actually tell the market that it has done so. Instead, the Saudis are going around simply asserting that they will step in as soon as they are truly needed.

Is this just the Saudis playing coy? No, writes the Oil Daily: "Saudi Arabia has been quiet about its output hike, most likely because of the political sensitivities in the region and the internal dynamics of OPEC, where members are expected to produce at target levels." In other words, if Saudi Arabia wishes to remain the uber-alpha male in OPEC, it must not be unilateral or bumptious, but navigate the shoals of the cartel with diplomacy.

Okay, I get that. But doesn't that defeat the purpose? If the market doesn't know that you've added the volumes -- which otherwise would be like apologizing to your wife for an egregious mistake by writing it on a piece of paper and putting it in your pocket -- why bother? I suppose there are just things about the Saudis that we are doomed never to grasp.

Speaking of Libya's impact, readers emailed me the nifty charts below. In the first chart, produced by the International Energy Agency, you can see that Ireland is the most exposed country in the world to Libya, which supplies almost a whopping quarter of its oil. Italy is next with about 22 percent reliance on Libya. Indeed, Europe in general is on the hook. As for the United States, it's relatively inoculated -- Libya satisfies just 2-3 percent of its demand.

In this chart, produced by the Russian news agency RIA Novosti, you can see Libya's export reliance. It by far sells the most of its oil to Italy -- almost a third of its export total. Ten percent of its oil goes to China, and 6 percent to the United States.

The fallacy about China's oil companies: One prevailing wisdom about China's global resource grab is that it's all a centrally devised plan. So that when China's oil companies hand out big loans to Brazil, Russia and Kazakhstan in exchange for oil supply and access to fields, they are effectively following Communist Party orders. Not so, says the Paris-based International Energy Agency.  In a new report, the IEA says that not only do the China National Petroleum Co., Sinopec and the rest operate autonomously and commercially, but they also have added volume to the world supply of oil and gas. Julie Jiang, who co-wrote the IEA report with Jonathan Sinton, said, "These are far from puppet companies operating under control of the Chinese government, as many have assumed. Their investments in recent years have been driven by a strong commercial interest, not the whim of the state." At the Wall Street Journal, James Areddy called the report "eye-catching."

Out one door, through two more: World power is shifting from west to east, and so is BP's portfolio of assets. Over the last month or so, the British company has announced $15 billion in operational tie-ups and share swaps with Russian and Indian oil companies, including a $7.2 billion deal this week with India's Reliance Industries, headed by Mukesh Ambani, one of the richest men in the world. At the same time, BP is reducing its foothold both in the United States and at home in the United Kingdom. All of this has followed BP's disastrous oil spill in the Gulf of Mexico last year. For BP, the strategy is a bet that, by gambling in Russia and India, it can increase its reserve base by about a third, to some 80 billion barrels of oil and natural gas, according to a Citibank estimate cited by the Financial Times.

Let's look at the bigger picture: Will Wall Street eversee BP the same again after the Gulf of Mexico, and bid up its share price astraders did for almost all the other major oil companies this week? Probably. Butit could be a long time. Production in Russia's Arctic region is a long way off -- perhaps a decade. So for now the value of these deals is largely notional.

We need some balance in the Libyan oil story. Is this north African nation an unmitigated disaster for those elsewhere in the world running an economy or driving a gas-guzzling vehicle? Notwithstanding the turmoil, the answer so far is no.

For good reason, much attention is focused on Libya's oilfields, since they are the whole reason why the United States, Great Britain and a host of oil companies have been courting Col. Moammar Qaddafi since he reopened the country to the outside eight years ago. An as-yet unknown volume of Libya's 1.6 million barrels a day has been shut down. Traders have bid up oil prices above $100 a barrel for the first time since 2008, though that's not very surprising -- what are traders supposed to do with such uncertainty (read: opportunity) staring them in the face? In addition, there's valid concern about the stability of the Middle East's big oil monarchies -- Kuwait, Qatar and Saudi Arabia. As Cameron Hanover, the energy analytical firm, wrote clients in an overnight note: "With unrest all around them, is there any really strong reason to believe that the [United Arab Emirates] or Kuwait or even [Saudi Arabia] itself can remain oases in this swirling, engulfing sandstorm?"

Still, when it comes to oil, things are going surprisingly well in Libya considering the turbulence.

Oil and gasoline prices -- currently continuing their rise through the roof -- are doing so in their role as a mirror on history. We will never look at the Middle East the same way again -- contrary to what we generally thought, the region's monarchs and dictators are all susceptible to the popular will. What one might call the Susceptibility Index is a relative one -- the globally crucial petrostates of Saudi Arabia, Qatar, and Kuwait seem comparatively secure. Yet, since so many articles of faith have already been punctured -- Mubarak is gone; Qaddafi looks like he will be behind him; the 230-year reign of the al-Khalafis of Bahrain is threatened -- we cannot rely on assurances that these geopolitical big wheels are absolutely secure either. And so oil prices are surging for a second day.

Here's how Helima Croft and Amrita Sen at Barclays Capital sum it up in a note to clients today:

The foundation that has held the region together for the past 30 years has been shaken and the first cracks that appeared in the tectonic plates with the uprising in Tunisia and Egypt is now causing widespread ruptures in the region.

Therefore, the economic models on which the big industrial nations, Wall Street, and the banks are operating will have to be reconfigured to take account of this new risk premium to the global economy. But Croft and Sen go on to say that oil history also shows that one should not fret too much -- markets correct themselves, and the flow of energy that feeds the global economy will probably not be damaged. Read on for  their thoughts.

Update: I discuss the big oil picture out of Libya and the Middle East this evening on Marketplace.

More on the dictator's playbook: A couple of weeks ago, we suggested a test for dictatorial leadership called the "Dictator's Playbook." When faced with popular unrest, are you statesmanlike, or brutal? As models, we pointed to Georgian President Eduard Shevardnadze's resignation in 2003 (he was not a dictator, but it was clear from protests that people wanted him out), and the 2005 massacre of protestors by Uzbekistan President Islam Karimov. After the comparatively peaceful ouster of the leaders of both Egypt and Tunisia -- the Shevardnadze play -- we have the alternative side of the playbook this week in Bahrain and Libya. Yesterday, forces in Bahrain stormed Pearl Square at 3 a.m., shooting at will and killing five protestors, and Libyan security forces killing perhaps two dozen people protesting the continued rule of Col. Muammar el-Ghaddafi. The clear signs are that we may have seen the extent of imminent  regime collapse in the region.

In Iran, one hears the usual calls for the execution of opposition leaders, but interestingly a letter is also circulating in which senior officers in the Revolutionary Guard request a guarantee from superiors that they will not be asked to fire on anti-government protestors. The money call is on the current regime, but this one bears watching.

Bahrain borders Saudi Arabia, the linchpin of the global oil industry, but is trouble possible in the latter? In the Wall Street Journal, Karen Elliott House delivers a take well worth reading on the fragility of the al-Saud family's hold on power. House's view: It is fragile indeed. However, most of the smart analysts believe there is very little chance of a Tunisian-style uprising that could upend the Saud grip on power.

 

The trouble with pirates: The thing about pirates is that they are inherently working outside the box. If they were always doing what people expected, they wouldn't survive very long. Hence the international strategy adopted to combat Somali pirates was never a long-term one. The Greek-flagged Irene SL, a supertanker carrying 2 million barrels of oil worth some $200 million, discovered that a little over a week ago when it was captured in ostensibly peaceful waters 900 nautical miles from Somalia. The oil was Kuwaiti and headed to the United States.

The world's seafaring countries -- the United States, Europe, China, Russia -- have succeeded in making it difficult for pirates operating around Somalia proper (though as we see in the picture above, Mohamed Garfanji, one of Somalia's top pirate bosses, remains on the loose). So now they have figured out how to venture further out, reports Robert Wright at the Financial Times. Write quotes Lt. Commander Jimmie Adamsson of the European Union's anti-piracy Navfor mission:  "It is like squeezing a balloon.If you squeeze a balloon in the Gulf of Aden, it will definitely expand in other directions because we're not there."

What is it like to be hijacked aboard an oil tanker in supposedly safe seas? In 2009, Saudi Arabia paid $3 million to gain release of the Sirius Star, a supertanker with $100 million in oil aboard that was hijacked more than 600 nautical miles from Somalia. Here are two illuminating videos with a British crew member of the Sirius discussing the experience:

 

Criminalizing cleverness in China:  Many times, the definition of opportunity is recognizing what's sitting before your face when almost no one else does. In China, that can be a serious violation of the law, as Xue Feng has discovered in the oil business. Xue, a Chinese-born American who successfully negotiated the purchase of an apparently open oil database for the U.S. consultant firm IHS (which also owns Dan Yergin's outfit, CERA), has lost an appeal of his conviction and eight-year prison sentence for spying. Three Chinese nationals have been imprisoned in the same case.

Oilfield data is regarded as a state secret in large parts of the world -- much of the former Soviet Union and the Middle East, for example. But one is pressed to think of another place that imprisons foreigners for collating and paying for apparently open data. What's the definition of what Xue was doing? Business.

 

Gas in, coal out, but when? It has seemed clear that the global glut of natural gas will ultimately trigger a demand response in the countries most thirsty for more electric power like Japan and China - they will use much more gas than currently planned, an event that is part of an ongoing shakeup in energy-driven geopolitics. But when exactly will that happen?

Not soon enough as far as Alaska and Russia are concerned. In Alaska, ConocoPhillips and Marathon are closing Kenai, a liquefied natural gas plant on the Cook Inlet that had exported LNG to Japan since the 1960s. I asked Conoco spokesman John Roper why the plant would be closed given rising natural gas demand. He replied in an email that the glut is simply too formidable. "The current market conditions in Asia and our inability to get commercial supply contracts there made the facility no longer economically viable," Roper said. In Russia, the news is that the gigantic Shtokman natural gas field in the Arctic is again being delayed, and now isn't envisioned for startup until the end of the decade. Shtokman has been wholly intended for export.

The Alaska decision bears watching because of what it says about efforts by BP and ExxonMobil to export the gas equivalent of 6 billion barrels of oil from the North Slope. These two companies are leading rival efforts to build a pipeline to ship out the gas, but they have been delayed because of the gas glut in the market-of-choice -- the United States. It's been presumed that if the U.S. market won't work, they can ship the gas by LNG tanker to fast-growing Asia. But at the Alaska Daily News, Tim Bradner wonders whether the Kenai decision signals that the Asian market has fundamentally changed, too.

More likely is that one must maintain a long-term view, and meanwhile economize, economize, economize. Consider news going the opposite direction - Bloomberg reports that demand is so high for LNG that a surplus of tankers is drying up, and doubling freight rates. Exxon has designed its own LNG tankers for this purpose, the Q-Max, which effectively make gas as fungible as oil in terms of the ability to ship it anywhere economically. There is also the sound of what one does not hear -- news of Exxon closing in any of its gigantic and ever-growing LNG supply in Qatar. Whatever trouble Conoco and Russia are having with their future marketing plans, Exxon has the largest LNG project in the world, and is not scaling back.

The 800-pound Saudi gorilla: Egypt is a significant country -- when its people took to the streets and shook the regime of President Hosni Mubarak to the bone, observers gave serious thought to the possibility that any Middle East autocracy could be up for grabs. Tunisia's ouster of President Zine el-Abidine Ben Ali led to Egypt, but simply did not send the same fears up the spine of the region's strongmen. Yet as the week ends with Cairo's so-called Day of Departure and the White House caucuses on how to smooth Mubarak's exit, what is truly on the minds of decision-makers? For many of them, it's Saudi Arabia. If unrest spreads there, all bets are off in global markets of all types, and particularly the oil market. Saudi Arabia produces 10 percent of the world's crude and in addition is the main "spare capacity" cushion keeping prices relatively stable. The calmest voices among us point out that Saudi -- and really the rest of the big petrostates in the Persian Gulf -- is a completely different case from Egypt, Jordan, Yemen, and other states under threat from internal discontent. The main difference is the power of the purse -- the Saudi regime has plenty of cash to spread around so that it does not have a gigantic, teaming mass of poor with a long history of deep, festering, and unresolved grievances. If you have not yet seen it, it's worth watching Christiane Amanpour's interviews with both Mubarak and his new vice president and intelligence chief, Omar Suleiman:

 

Big Oil's fork in the road: How to navigate the uncertain shoals of oil over the next two and three decades? The smartest minds in Big Oil are not sure and at the fork of the road have all taken different paths, write Sheila McNulty and Ed Crooks at the Financial Times. BP has shrunk and gotten into bed with Russia; ExxonMobil and Shell are turning themselves into natural gas companies; Chevron is sticking with the orthodox model of hard-core exploration; and ConocoPhillips has turned away from the Big Oil, grow-as-big-and-burly-as-possible model and sought big returns by being a Medium Oil company. So far, the market has rewarded Conoco the most, pushing up its share price by a third over the last year; Shell is up 26 percent, Chevron by 19 percent, but Exxon's up by just 7 percent. BP is down 12 percent.

 

Pipeline politics in Europe: One must admire Europe's newfound determination to create another source of natural gas and prevent Russia from exerting undue petropower on the continent. Despite history suggesting a quixotic effort, European Union Energy Commissioner Günther Oettinger has gotten both Azerbaijan and Turkmenistan to agree in principle to supply gas to the long-proposed Nabucco natural gas pipeline. Now, Oettinger is attempting to embarrass the pipeline's European partners into lining up the financing and starting construction of the $11 billion line before the two Caspian Sea republics sign actual commitments to ship their gas volumes, Reuters reports. The Turkmen and Azeris say the Europeans have to move first. The Europeans say the Caspian republics do. History suggests that the Europeans are right to wait -- the Turkmen and the Azeris aren't going to sign anything until Russia informs them that there will be no punishment for doing so. Next stop for Oettinger: Moscow.

The groundhog factor: Punxsutawney Phil, a groundhog from Pennsylvania, had bad news for natural gas producers, but good news for the rest of us -- winter will end early, and spring will be upon us in no time. Why do we bother occupying our time with the thoughts of a rodent? According to Wikipedia, "The Groundhog Day celebration is rooted in a German superstition that says if a hibernating animal casts a shadow on Feb. 2, the Pagan holiday of Imbolc, winter will last another six weeks. If no shadow was seen, legend said spring would come early." In the interest of balance, we offer up Phil and a rival, Woody the Woodchuck, who did see her shadow, indicating six more weeks of winter.

Lost among the high-profile shake-ups going on in the Middle East -- Egypt, Jordan, Tunisia, Lebanon, Yemen, Sudan -- is a little development 2,500 miles away in the petrostate of Kazakhstan. President Nursultan Nazarbayev yesterday discarded intricately laid plans for a 10-year extension of his rule. If enacted, the plans would "set the wrong guidelines for further generations of politicians," he said.

Nazarbayev is right, but what about his substitute for the extension -- a snap election in a few months that will add five years to his already two decades in office?

We've been discussing how far the ripples of the turmoil in Egypt might be felt. Until now, only Middle East dictatorships have appeared to be at risk. But it's early -- it took awhile in the late 1980s before the Gorbachev-era democracy wave took hold, and long-standing political and commercial walls fell from Latin America, to Asia, to Europe.

Over the weekend, Russell Zanca argued on this blog that the former Soviet Union in particular feels impervious. To that list one might add Iran (pictured above are, from left, Nazarbayev, Turkmenistan's Gurbanguly Berdimuhamedov and Iran's Mahmoud Ahmadinejad). When such uprisings have occurred in their midst in recent years, Russia and Iran have demonized their participants as stooges of Western-inspired "velvet revolutions." Imaginative U.S. diplomats assigned to these countries themselves have conjured up an inflated role in events.

The Middle East turmoil therefore ought to put the kabosh on such thinking: Assassinations and military coups can be organized from the outside, but successful popular uprisings arise from within.

Likewise, the uprisings are both vindication and repudiation for former President George W. Bush. They are vindication of what he said in 2003 -- that "as long as the Middle East remains a place where freedom does not flourish, it will remain a place of stagnation, resentment, and violence ready for export." They are a repudiation of what Bush did in response, which was to invade Iraq: Eight years later, the country remains a case study of the axiom that democracy cannot be imposed from the outside.

Current and former U.S. diplomats tell me that Egypt had little influence on Nazarbayev's decision to backtrack from his planned decade-long term extension. More likely, said one, is that Nazarbayev's motivation was to freeze out rivals with dreams of succeeding him, which the snap election resolves almost as well and perhaps better than the referendum idea. After all, like asking your boss for a 25 percent raise, 10 years can seem like overreach.

Yet even if Nazarbayev had been getting cold feet prior to Egypt, he could not be indifferent to the turmoil in the Middle East. Even if a popular rebellion appears highly unlikely at the moment, much can change: No dictator wants to spend a decade looking over his shoulder. Certainly this thought cannot be far from the minds of autocrats around the world.