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.
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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With the increase in U.S. oil production, the cost should be going down due to the supply.
Even with this increased supply, gas will never go down appreciably. Why.
Limited refining capacity in the U.S.
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.
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.
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 !
If your gona screw me tell me,,, I'm gona screw you,,,,
Don't piss down my back and tell its raining though
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