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 recently 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 prices tamped 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.

Oh, prices could dip down a bit back into the double-digits, but short of some apocalyptic global economic meltdown such as we saw in 2008, get used to paying a lot more to fill your tank.

Morse made his remarks in Houston at the Davos of the oil industry, a week-long conference put on by oil historian Dan Yergin called CERA Week. I pulled Morse aside after his speech. Here is our conversation:

Even so, Morse is much less pessimistic regarding the coming decade than some others, such as Total CEO Christophe de Margerie (see yesterday’s blog post). For instance, as Morse says in the video above, he thinks we will have a lot more spare oil production capacity coming two or three years than is generally understood — spare capacity is not

going to dry up in that period, he says. Recall that when traders fail to see such a global cushion of surplus production capacity, they tend to react in a panic-stricken manner to energy events like pipeline explosions or hurricanes. We see this panic in the form of higher oil and gasoline prices. The world may still face a crunch in the middle of the decade, with all the disruption that suggests, Morse says, but fresh oil supplies will come onto the market by the end of the current decade.

So we have a divergence among the big thinkers — de Margerie forecasts general upheaval because of oil shortages; Morse thinks geopolitics have changed the Middle East, but that oil supply is misunderstood. All these folks are reasonable, so we can’t know with certainty who is right. What we can do is diversify in preparation for whatever happens.