Jewish World Review Feb. 25, 2011 / 21 Adar I, 5771
Five Dollars a Gallon?
By Greg Crosby
The uprisings in the Middle East aren't just affecting Middle Easterners, it will impact all of us, and we will feel it soon - really soon. While the people back there are overthrowing their dictators, we in the good 'ol USA will fall further into our recession.
The LA Times reported last Wednesday, the oil price hit $100 a barrel as the revolt in Libya escalated. But it's not over, not by a long shot. Watching the real time oil prices on line is even more frightening. Experts are saying that more turmoil in the Mid East is coming and that will mean reduced supplies for the entire world. And when supplies are reduced, oil prices go up and stock prices go down. Oh, and the American economy will continue going from "The Great Recession" to "The Great Depression."
Libya alone is the 12th largest oil exporter on the planet so if we lose that resource we're losing 1.6 million barrels a day. That accounts for about 2% of global production. We've seen the uprisings go from Tunisia, to Egypt, to Libya, to Bahrain and it continues to move across the North African and Middle Eastern countries. If it spreads to Saudi Arabia then we're really cooked. The American economy simply can't be supported without Arab oil.
Between 300,000 and 400,000 barrels per day of Libyan oil output, or as much as 25% of the total, already has been shut off as the revolt has spread, according to Reuters news service. Edward Meir, senior commodity analyst at MF Global in New York, said the latest jump in crude prices reflected traders' belief that "it is just a matter of time before all [Libyan] exports are shut down." It's time for the Saudis to open their spigot wider, Meir said. "The market needs to see that the supplies are being replaced," he said.
The Saudi oil minister has pledged that they will make up and shortfalls of oil due to the uprisings in Libya. That's really nice of him to say that, but if the revolts reach Saudi Arabia all bets are off, folks. And if you think that there's no time bomb in Saudi Arabia, think again. It's already started ticking.
As reported by Reuters, hundreds of people have backed a Facebook campaign calling for a "day of rage" across Saudi Arabia on March 11 to demand an elected ruler, greater freedom for women and release of political prisoners. The page called for a "revolution of yearning" in the kingdom, which is the world's biggest oil exporter and is ruled by an absolute monarchy. As of last Wednesday morning, more than 460 people had endorsed the page.
Remember, those Arab uprisings which overthrew leaders in Tunisia and Egypt were mobilized by young people using social media networking on the internet. It's the new thing. It's the 21st Century style of organizing revolutions. Google is simply not your father's search engine anymore.
And as "the kids" take to the streets, oil prices continue to skyrocket. Wall Street experts say that gasoline prices will continue to rise. Some traders say $4 a gallon will be a reality in the not-too-distant future, and prices could shoot even higher. Prices will definitely be higher on the East Coast and West Coast than in the interior of the country.
All of this is, of course, wonderful timing for our so-called economic recovery, not to mention up-coming summer vacation driving trips. Oh yes, you're gonna love pumping $70 or $80 dollars worth of gas into your car every time you fill up…if you're lucky. Remember all those gas lines at the pump way back in the '70's? It's gonna be great. High prices AND gas lines! But remember, all we had to do since then in order to break with our reliance on foreign oil was drill in our own country. Thanks to the liberals and environmentalists, the years ahead could very possibly make us all nostalgic for the good old 1970's. Happy days are here again.
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© 2008, Greg Crosby