Piracy as Shark Attacks

Earlier this month, Foreign Policy posted its "Top Ten Worst Predictions of 2008." It was a good piece, but number three has been nagging at me:

“[In] reality the risks to maritime flows of oil are far smaller than is commonly assumed. First, tankers are much less vulnerable than conventional wisdom holds. Second, limited regional conflicts would be unlikely to seriously upset traffic, and terrorist attacks against shipping would have even less of an economic effect. Third, only a naval power of the United States’ strength could seriously disrupt oil shipments.” —Dennis Blair and Kenneth Lieberthal, Foreign Affairs, May/June 2007

On Nov. 15, 2008 a group of Somali pirates in inflatable rafts hijacked a Saudi oil tanker carrying 2 million barrels of crude in the Indian Ocean. The daring raid was part of a rash of attacks by Somali pirates, which have primarily occurred in the Gulf of Aden. Pirates operating in the waterway have hijacked more than 50 ships this year, up from only 13 in all of last year, according to the Piracy Reporting Center. The Gulf of Aden, where nearly 4 percent of the world’s oil demand passes every day, was not on the list of strategic “chokepoints” where oil shipments could potentially be disrupted that Blair and Lieberthal included in their essay, “Smooth Sailing: The World’s Shipping Lanes Are Safe.” Hopefully, Blair will show a bit more foresight if, as some expect, he is selected as Barack Obama’s director of national intelligence.

When I first read this, I wasn't particularly sold. After all, a one year jump in piracy doesn't tell us a whole lot. Certainly not enough to invalidate the Blair/Lieberthal thesis. Second, I filled up my gas tank yesterday, weeks after the oil in the Saudi tanker in question was taken off of the market. It cost $1.67 a gallon.

Now, Benjamin Friedman at CATO comes through with a more substantive analysis:

The big reason piracy has increased in this decade is probably because maritime trade itself grew - from 4 billion tons of cargo in 1990 to 7.4 billion tons in 2006, according to the International Maritime Organization. There are more targets. But piracy’s overall effect on trade remains small. One estimate of piracy’s annual cost is $16 billion a year. Some say even that estimate is far too high. Maritime commerce back in 2005 had a total value of $7.8 trillion. Note that even the hijacking of an oil tanker in the Gulf of Aden has not much slowed tanker traffic there.

He also notes that "according to statistics kept by the International Maritime Bureau (IMB) piracy is not occurring at an unusual rate this year."

I say point Blair/Lieberthal. For now.