Anyone who hasn’t had their head in the sand – or been on vacation to Disney World – is well aware of the conflict going on in the Middle East. Long-time regimes that have ruled their citizens with iron fists are toppling–Egypt, Libya, Bahrain and others.
The merits of the uprisings are still being measured, but one thing’s for certain–their effects on the global well-being are already being felt. The price of oil, which was already artificially high at around $86 per barrel, jumped 9% yesterday for no reason other than investors ‘fear’ what might happen with the country’s oil production.
The article references Libya as No. 18 in OPEC in terms of production, which translates into the country as producing just 2% of the world’s oil . . .2%!!!! Why then does the price of oil jump 9% in one day?!? Libya’s oil could be completely shut off, and it would hardly make a dent in the total supply of oil needed daily by the entire world.
Oil is utilized in many hundreds of ways and has helped make our quality of life better than at any other time in recorded history. When the price of oil increases, the price of everything else will follow because of increased gasoline and diesel prices, among other factors. Higher oil prices means less money for discretionary spending to most folks.
The economy is in the tank in a large part because fuel prices eclipsed $4.00 a gallon in the summer of 2008. Since then, the recovery has been slow to take hold locally, nationally and globally. Money is tight everywhere. So, how can $94 a barrel oil and $3.10 a gallon gasoline be justified at this point? Aren’t prices for the most part based on supply and demand? Since the economy is sour, the use of oil has gone down, yet, the price is going back up again. How can this be justified?
Surely, another set of factors is controlling the oil and fuel markets, perhaps those that haven’t been revealed to the American public. No one can make me believe that a disruption in a country that supplies 2% of the world’s oil justifies the price of a barrel wildly increasing 9% in one day. That’s just bull.
Joe Buck Coates