Global Terrorism and Oil Price

Instead of the Intro

In the course of the Data Science Immersive at General Assembly we were asked to apply Bayesian statistics to the dataset to produce inferences based on what has happened in the past or in a different geographic location and if that has influenced the posterior chances.

While preparing the required inferences, I decided to look deeper in observations of bombings and explosions recorded in Russia with a focus on Chechnya and Dagestan. What I notices was that the terrorist activity spilled over from Chechnya to Ingushetia and Dagestan. Look below:

I started reading on terrorist attacks in the North Caucasus and what came clear to me is that how notoriously those groups were targeting to steal oil from bypassing pipelines. I borrowed the next picture from EurasianGeopolitics website:

Source is Eurasian Geopolitics

At that moment I asked myself: “Is is a local phenomenon or does it happen globally? Does the oil orchestrate the global terrorism? I added the oil prices over the global terrorism statistics. Specifically, I was interested in the 2014 value adjusted prices. Have a look and tell me if you see the same correlation I see:

Created using Tableau Desktop

So, I checked the correlation between black line of oil price and the red line of the number of terror attacks in the past 46 years (1970–2016) and the correlation was not as high, but then I decided to slide the oil price year by year to check if the oil price has a delayed effect on the terrorist activity. Below is the Pearson’s correlation coefficient as a function of oil price lag by x years:

What I think it means is that oil, with $1.7 trillion market value, as number one commodity in global trade (more here) is probably the inevitable influencer and financier of global terrorism. Is it an issue?

It definitely raises an issue of public control over oil production and global trade. Another aspect of such correlation is a potential interest of the developed world in decreasing its dependence on oil as the source of energy. In that light the humanity shall focus on alternative energy sources.

I am done for today!