The new tensions in the Middle East have caused oil prices to spike up to almost $80 per barrel of crude - a shocking price to say the least.

The reason for this rising price has been not so much Israel's incursions into Gaza and Lebanon, but rather whether Israel will adopt a hostile stance towards another neighbour - Syria.

Syria in turn is backed by Iran which could give a whole new dimension to the standoff if drawn into it. This is the real reason why prices have shot up. Analysts have said that tensions might start to ease later this week and Israel has confirmed that it will not be re-occupying Lebanon. But until the world sees a withdrawal of Israeli soldiers from Lebanon, speculation will increase and so will prices. We had seen oil process spike when oil processing plants were damaged in the Southern US, coupled with disrutption of production in Nigeria and the Gulf of Mexico.

These eventually settled down and returned to some semblance of normality. Although prices are never going to go down to what they were even two or three years ago - the last three months prior to this conflict brought a period of stability - so much so that the electricity surcharge actually decreased locally by some three per cent.

Analysts the world over, although trying to not cause global panic, have said that the possibility of triple-digit oil prices could not be a "fantasy anymore". In fact, the upcoming September contract has already quoted at above $79. We could have one of two scenarios. If the conflict settles down, we could see prices continuing to increase gradually until the next destabilisation. If the conflict escalates, we could actually see an explosion. OPEC of course has to do its bit and so far, it has confirmed that it would do its best to retain stability and has put some minds at ease by also confirming that it has reserves of crude.

Another potential flashpoint could be Iran aside from the Middle East conflict. The Teheran seat of power has already threatened to use oil as a weapon in the standoff over its nuclear programme. Being OPEC's number two supplier, this could set alarm bells ringing, but could also trigger an agreement in the dispute.

Another factor which could help is that the G-8 meeting is taking place this week in Russia. The Russian state does have good relations with Iran and some of the Middle East states affected by the Lebanon crisis and it is expected that Russian Premier Vladimir Putin will try to bring about a proposal from the G-8 to halt both the hostilities and the stand-off with Iran.

So where does that leave little old us? In the lurch would have to be the answer. One must stress that this is a situation that is completely beyond anyone's control - whether it be our government or that of any other nation. Electricity prices went up by 23 per cent in Malta in 2005, and while it is still amongst the lowest in Europe one has to look at the situation in tandem with average wages. This newspaper had warned, merely a year or so ago, that prices could rise to as much as $70 per barrel. Some pooh-poohed the idea - well it has come it now. The government has stressed that it wants to link the energy grid to Europe's. This must be done and it must be done soon and the move will win the wide support of many. The consequences of not even being able to afford our oil needs would be catastrophic.