When I started this blog two years ago, crude was priced at $60 per barrel. Now it's $96. The dollar was $1.21 to the Euro then: now it's $1.44.

So go the figures. Something is up. There is a big picture to this, and - shock and awe - after spending the best part of the last two years studying International Relations, I have a theory.

The basic idea is this: there are too many people chasing too few resources. Breaking down this simple statement brings us to two key players - the US and China. And the hidden factor is the instability of a multipolar world that is evolving into a bipolar structure: the 'West', led by Washington, and the 'Rest', very loosely led by China, competing for dominance over those resources, particularly energy.

The thing is that, unlike the Cold War where two political ideologies were in competition, current US hegemony is still based on military and political power projection, whereas China's ace of spades is economic soft power.

The misuse of firepower is adding to rather than reducing the global instability that came to our notice on 9/11 (but had existed well before then). The World Trade Center attacks were as much a protest against US foreign policy than a statement about political Islam, and since then Islamist terrorism has increased exponentially.

The instability caused by terrorism is adding to the energy crisis by contributing to high prices if not yet directly threatening supply. Meanwhile, China's economic leverage means that the only way that US industry can compete is with a weak dollar. However, both things mean that oil producers such as Russia and manufacturers such as China are building enormous reserves of dollars, shifting the centre of the world economy away from the West. Thanks to events such as the subprime crisis, an economic meltdown is probably imminent.

China and Russia themselves are involved in abetting instability. While they do not directly support terrorism, they sponsor states such as Iran, the key outside player in Iraq and probably Afghanistan. Pakistan is also a pivotal state in all this, since if Pakistan goes down Afghanistan goes with it.

If Iran is bombed too, as looks increasingly likely, there will be a black hole of chaos slap bang in the middle of Eurasia - from Iraq through to Pakistan - creating a massive geographical chokepoint that most of the world's energy needs to get past.

The more terrorists that are bred in the black hole, the more the West has to spend on security, thus diminishing economies and general confidence. The US is already spewing vast quantities of blood and treasure on Iraq, a situation that can only be helping China's peaceful rise and Iran and Russia's leverage over the energy market.

Add to this the threat of WMD. After the Cold War ended in 1989, only the US had the capability to launch a decisive military blow. Now anyone, terrorist groups included, with a bomb (probably with uranium sourced from Russia and technology from Pakistan, itself donated by China) and a suitcase can hold any other entity to ransom - just as energy suppliers like OPEC and Russia can cut off dependent economies overnight.

Iran and Pakistan are both the key proxy players and the key potential battlegrounds. China and the US are vying for control of both, since whoever calls the shots in Tehran and Islamabad calls the shots over Gulf oil and the terrorist training grounds in Iraq, Afghanistan and the lawless badlands of Pakistan.

Russia sits in the middle, ostensibly neutral but leaning towards China and away from the US. It got burnt in Afghanistan in the '80s, but isn't shy of lending a helping hand to Iran. Conversely, India is also on the fence, but looks to Washington rather than Beijing. It needs stability in Pakistan above all else, since the threat of a nuclear standoff could suddenly become very real.

Thus it's all connected. That's what this blog is about - making the connections. It's not a dissimilar situation to the Cold War with its proxy conflicts in Vietnam and Afghanistan, but it is a more complex one. Instead of two or three, there are now four horsemen of the apocalypse - the West, meaning America and its rather powerless allies (notably Europe and probably India), versus the Rest's nexus of counter-hegemony - China and its partners-in-crime Russia and Iran.

The prospects for war? Unlikely at the time being, since Beijing and Washington are still playing different games. Should they ever go head-to-head, however, over Taiwan for example, then all hell will break loose.