Just what the economy doesn't need: Costlier oil

Even with the US summer driving season nearing an end, turmoil in Egypt is keeping the heat under crude prices.

By Jonathan Berr Aug 19, 2013 3:28PM
Oil derricks (© Comstock/Corbis)As if lackluster earnings and stubbornly high unemployment weren't reason enough to worry about the economy, along comes word the oil prices are starting to move higher amid intensifying worries about political tensions in the Middle East.

According to a Goldman Sachs (GS) reported cited by Bloomberg News, global oil supplies have tightened in recent weeks as the summer driving season comes to a close. Prices for Brent crude may reach $115 a barrel in the "very near term," according to Goldman. Prices for the global benchmark are now $110.

Three things overhang the oil market.

 First is Egypt, whose Suez Canal is one of the main passages for Mideast oil shipped to the U.S. and other foreign markets. Plus, having a country of 91 million people plunged into chaos would unnerve investors even if oil weren't involved.

Libya's oil industry was just recovering from the damage inflicted on it during the country's Civil War that led to the ouster and eventual death of dictator Col. Moammar Gadhafi. But workers there went on strike last month, and exports have plunged. According to news service AFP, the strike has cost Libya $1.6 billion dollars in lost export revenues since July 25. The government there has threatened to break up the labor action.

Planned maintenance in Iraq's oil fields that's expected to start next month will cause a small drop in that country's oil exports. According to The Wall Street Journal, Iraq currently produces about 3.2 million barrels per day and expects to produce 4.5 million barrels next year.

So far, U.S. gasoline prices have remained steady. According to the AAA Daily Fuel Gauge, the average price for a gallon of unleaded is $3.538, down from $3.72 a year ago. Should demand remain strong and geopolitics uncertain, pump prices will start to climb, which will further unnerve consumers' already-frayed confidence.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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177Comments
Aug 19, 2013 3:58PM
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Excuses, excuses, excuses...if a penguin farts in Antarctica this will cause OIL to rise.  Tell me any story you want but the bottom line is GREED.
Aug 19, 2013 5:02PM
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Excuse me!!!!! Before we start trading for foreign oil, I was under the impression, with the thanks to our media,  that the U.S. is now producing enough of it's own oil to where we would not have to import nearly as much as in the past. Did I miss a memo or something or is someone just trying to cause another panic to drive up margins. Plus, as I understand it, we were importing a small percentage from that particular region anyhow. Is this country that stupid or what!!?
Aug 19, 2013 4:26PM
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The people running the country wanted $5 a gallon gas a few years ago to cut consumption. Their scheme was about raising taxes and more revenue for their schemes but they had no concern for the impact on the economy.  Now their media mouthpiece is worried about oil prices? 
Aug 19, 2013 5:03PM
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i'd like to find the idiot that comes up with all the bullcrap excuses and slap the crap out of them. they do the same thing about the stock market too. you'd think that some of our government officials would put a stop to raising prices because of rumors. nothing has to actually happen to raise prices just fears in the middle east or switching to the winter blend or summer blend or something happens somewhere that doesn't have anything to do with where our gas comes from.
Aug 19, 2013 4:32PM
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With the increase in U.S. oil production, the cost should be going down due to the supply.

It isn't.

Even with this increased supply, gas will never go down appreciably.  Why.

Limited refining capacity in the U.S.

Aug 19, 2013 4:31PM
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Yeah, cause Egypt is a huge oil producer. The West owns the Middle East, we occupy every country over there and we will drone anyone in our way, it is a disingenuous argument to say that these civil spats will come close to impacting oil. Wake up Wall Street, you are turning America into Detroit by pulling a disproportionate amount of dollars out of local economies. But you know that, you just don't care.

Aug 19, 2013 5:44PM
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Tell me again, why shouldn't the United States drill our own oil? I must have forgotten.

Why have we not built a new oil refinery in our country in decades?

We're sitting on an abundance of oil here at home, and if we do drill for it, we ship it overseas to

have it refined, then buy it back. The rest of the world must think that we are the three stooges.
Our energy secretary is Steven Chu, (nobel prize winner), obama, (nobel peace prize winner),
and Ben Bernanke (chairman of the federal reserve) seem inept. Yea, the three stooges.

Aug 19, 2013 4:08PM
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This is exactly why we need to expand our use of CNG as our fuel of choice for all of our transportation needs. We could be the largest exporting nation of oil and gasoline and get off the middle eastern teat.
Aug 19, 2013 5:05PM
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Every dollar that goes out of the country to buy foreign oil is one more dollar out of our economy.  Since the price of fuel oil and gas has doubled our economy has been struggling.  Washington needs to address this issue if it hopes to get America back to work.
Aug 19, 2013 5:23PM
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They look at France and the UK paying 7.50 to 8 dollars per gallon and they are trying to figure a way to get us much higher without tipping the entire country into a very big economic downturn ! Bumping it slowly over time is all the conspirators can do !

Aug 19, 2013 5:41PM
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Just another excuse. Why doesn't the government step in?? Who wants to empty the pork barrel? We need to get rid of the fools we have in congress and elect people who will work for the betterment of their constituents and not heir own monetary gain. The state of Kentucky is looking at  a one hundred million state Senate race. That is outrageous! Right now I wouldn't give you two cents for any of the congressman from Kentucky. These idiots in Washington wonder why they only have a 14% approval rating, the economy and related inflation because of gas and food prices are just a few.  
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Drill Baby Drill. Our government is stupid when they don't allow the US to reap the riches beneath  our feet, but allow a foreign power to dictate how much our oil costs, and, on top of that, allow foreign companies to buy land in the US and drill here for themselves. What kind of secret payoffs are people getting to do stuff like this. I see the" environmentalists" have not given up their way of life to " preserve the planet" in fact, a lot of them look like elitists trying to pull one over on everyone else.
Aug 19, 2013 5:52PM
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when isn't there tumult and political tensions in the middle-east?
Aug 19, 2013 5:51PM
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If your gona screw me tell me,,, I'm gona screw you,,,,

 Don't piss down my back and tell its raining though

Aug 19, 2013 5:24PM
Aug 19, 2013 4:49PM
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Build the Keystone Pipeline, NO MORE BLOOD FOR THAT ARAB OIL....
Aug 19, 2013 4:54PM
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At least in the US OF A THERE IS NO REASON TO JACK UP GAS PRICES FOR HAVE MILLION OF STOCKED BARRELS OF OIL THROUGHOUT THIS COUNTRY BUT ESPECIALLY IN OUR SOUTH!
Aug 19, 2013 5:44PM
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Elector you didn't break any bad news to me.I justwish our politicians would
see it in their heart to help the citizens our our great country just once,no
matter how much it hurts.
Aug 19, 2013 5:13PM
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The Pope passed wind therefore gasoline prices at the pump must increase.
Aug 19, 2013 5:22PM
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What get's me is the US starts all this crap with over throwing of gov's
and the American public ends up paying for it.Irag really accomplished
a lot didn't it?I know how to cut our gas prices,increase our oil output.
Right,that didn't work either did it.
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