Vice President of Analysis Peter Zeihan examines Libya's current crisis and the possibility of an east-west civil war from the perspective of energy and economics. Editor’s Note: Transcripts are generated using speech-recognition technology. Therefore, STRATFOR cannot guarantee their complete accuracy. Geographically, Libya is a peculiar entity. Everyone thinks of it as a relatively constrained place, but it's not. Most of the population — over 90% of it — lives very close to the shore, but the coastline is stretched out 1800 kilometers. So you've got basically a long, thin ribbon of a state. In the era before oil, is made development as we now know it basically a non-option. So the country has always been split between west and east with a big gap in the middle. Even in the modern day it wasn't until the 90s and that the Libyans really started the first road network — and by network, I really mean one road going up the coast from east to west. Add in the fact that is mostly desert, it's a very thin population, 6.5 million people. As such, the idea of an independent Libya is something that is unique to the 20th and 21st centuries and the collapse of colonialism. Libya is a moderately sized oil producer. Its total production is about 1.8 million barrels per day. Under normal circumstances it exports approximately 1.5 million barrels per day, of that, most of which goes to Europe. The problem Libya faces is twofold. First, they only have about 6.5 million people, so they've never been able to generate a significant educational institution at home. So they've never been able to train the mass of technocrats and engineers that is necessary to maintain an oil industry of this size. As such, they're pretty much dependent on foreigners to come in, sink in the cash, drill the wells, maintain production and ultimately to the exports out. National Oil Company does maintain a sizable presence, but it's mostly an issue of resource nationalism more than any sort of technical competence. So without the foreigners, production pretty much dries up. Over the course of the last 72 hours, every major oil company that operates there has announced a steady drawdown of their staff, several have evacuated completely, and based on the best information available to date, over half the production is already completely off-line and we expect that most go off-line within the next 48 hours. The second problem is that not all of Libya's energy in one place. It's actually sequestered between two very separate basins: one in the West, which exports from just west of Tripoli, and one in the East, which exports from a number of different facilities in the Gulf of Sirte, and then one almost on the Egyptian border. There is, for all practical purposes, a military split in the country right now between the East and the West. You have about two thirds of the population in the West, about one third in the East, separated by about 600 km of mostly empty desert. You have about two thirds of the oil in the East, about one third of the oil in the west, so you got this split in the country between the population and between the energy; there's no overlap between the two. So Gadhafi's problem is that the majority oil income is dependent upon security in the half of the country that right now he can't control. Internationally, there are two things to keep in mind with Libya's energy. First of all, it's mostly light, sweet crude, which is in demand pretty much everywhere in the world. So as Libyan crude goes off-line, you should expect a pretty dramatic price increase in oil overall because this is some of the best stuff that's out there. Second, there's one country that is far more vulnerable to anything goes wrong in Libya than any of the others, and that is Italy and Italy's state linked energy company ENI. Right now roughly 15 to 20% of their total global portfolio in terms of oil production is in Libya, and if it's not off-line now, it will be very, very soon. Also, all the natural gas that Libya exports via pipe goes to Italy, goes to ENI, so this is a company that sees its portfolio gutted and it's seen its country probably a little annoyed that it's not a little bit better diversified. The question in STRATFOR's mind at this point is what degree has independent political control and military control consolidated the east. We know that Benghazi, the second center of population in the East, has basically declared independence from Tripoli. But if they can spread up and down the coast to control all of the oil export facilities and if they can consolidate that, then they have a very good chance of breaking away from Gadhafi, maybe even starving him of money because that's the majority of the oil revenues. So if Benghazi can expand down into the Gulf of Sirte and down to the city of Surt, they've got a very good shot of independence at the least — or maybe even overturning him at the most — but if they can't do that, Qaddafi in time will be able to pressure them.