Gasoline prices are likely to crawl higher as anti-government protests continue in Egypt.
“The national average for a gallon of regular gasoline was $3.124 on Friday, according to AAA, Wright Express and the Oil Price Information Service. That's up 2.4 cents in the past week. Analysts expect prices to stay at $3 a gallon or higher — perhaps rising as much as 8 cents over the next two weeks — until the conflict in Egypt is resolved and tensions ease in neighboring countries.” (http://news.yahoo.com/s/ap/us_oil_prices)
Oil remains the biggest trade, and perhaps the biggest risk for traders, as unrest in Egypt persists. Countries, such ad the U.S and especially Europe as a whole are worried about the markets and any disruption to the Suez Canal or Suez-Mediterranean Pipeline; Egypt's key routes for oil transit from the Red Sea to the Mediterranean. A disruption in supply may be a major method for a big move in the price of oil.
So what will happen in the future? Speculations? Prediction markets? This is a speculative market designed so that prices can be interpreted as probabilities and used for prediction. Will the disruption in supply in Egypt, affect the prices of oil? Uncertainty about the spread of unrest could send oil prices significantly higher early this week.
(http://www.cbsnews.com/stories/2011/01/31/ap/business/main7302244.shtml)
Fantastic post Farida. The idea of oil prices rising as a direct result of the crisis in Egypt did not even cross my mind. I am going to be paying careful attention to gas prices over the next few weeks because of your post. I think an important factor in this equation is how much oil do we, and other countries, currently receive from Egypt. I say this because the more oil we buy from them, the more our lives' will be affected. And vice versa. For instance, if the amount of oil we purchase from Egypt is only 12% of the total oil we purchase from other countries, than I believe it's safe to say that gas prices won't be affected too much.
ReplyDeleteFarida, you have hit on something very important for the Energy Industry in that it is very sensitive (more so than most other industries) to international events (especially those in the middle east). This is something that I would keep in mind and keep posted on. I would almost say that it would be more important to focus on current events articles in your industry than it is for any other industry.
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