The Price Of Oil

Iraq, Iran, Nigeria, Sudan, Mexico, Venezuela, Libya, Russia, Azerbaijan, Kuwait, United Arab Emirates, Saudi Arabia – as long as all of these countries are stable and untroubled, the bulk of the world’s supply of oil can be pumped out of the ground and the price stays stable. At the moment, Libya is the least troubled.

Of course, increased tensions anywhere near these countries, or along the sea lanes from these countries to oil refineries can be a problem.

The price of a barrel of crude jumped $20 on threats to Iran, $5 on the North Korea missile tests, $5 on the Israeli invasion of Lebanon, not to mention the existing problems in Iraq – none of which has anything to do with supply or demand, merely the perception of possible supply problems if things go bad.

Into this mess Chicago Dyke of Corrente interjects the decision of Citgo to stop selling gasoline in Iowa, Kansas, Kentucky, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma and South Dakota. Citgo will also cut a limited number of stations in Illinois, Texas, Arkansas and Iowa.

Citgo is a subsidiary of the Venezuela state oil company, and Hugo Chavez is apparently tired of listening to threats from the Shrubbery. There are plenty of people will to buy Venezuelan oil without calling Chavez names.

Corrente has also been following the Mexican election story which will impact the price of gas, as the US is a major importer of Mexican oil. The Shrubbery’s premature call to the PAN candidate, Felipe Calderon, could cost the US dearly, if the PRD candidate, Andres Manuel Lopez Obrador, is finally adjudged the winner. There is no official winner at this point. Exxon doesn’t like having the US government in its business, so why would the government of Mexico.

Fortunately you never forget how to ride a bicycle.