Libya, Gadhafi, gas prices

Libya, Gadhafi, gas prices

February 23rd, 2011 in Opinion Free Press

In our highly connected world, what happens in some faraway, seemingly unimportant nation can affect us all.

Libya is undergoing violent upheaval that may overthrow that country's government. That has major implications for the entire Middle East as well as lesser but still important implications for all of our pocketbooks because of the effect the upheaval will have on oil and gasoline prices.

We Americans are heavily dependent on cars and therefore on gasoline. So we feel it when gas prices rise. While we produce quite a bit of oil, and thus quite a bit of gasoline, inside the United States, gasoline supply and demand throughout the rest of the world also affect our prices.

Have you noticed that oil prices have suddenly jumped to more than $93 for a 42-gallon barrel? And the crude oil price on the London market has jumped to $106 a barrel this week. Obviously, "something" is happening that is affecting world oil prices.

One such "something" is the political instability in Libya. But what's Libya to us?

It is a big, mostly desert country of only 6.5 million people in North Africa, on the Mediterranean Sea, west of Egypt. But it is a huge oil producer and a member of the Organization of Petroleum Exporting Countries (remember OPEC?). Libya sells about 80 percent of its 1.7 million-barrel daily oil production to Europe.

But now there is massive political turmoil in Libya, directly affecting oil supplies to Europe and indirectly affecting our oil and gasoline prices in the United States, too.

Libya has been ruled with an iron hand by Moammar Gadhafi for about four decades. Libya was behind the 1988 Pan Am Flight 103 bombing over Lockerbie, Scotland. That attack killed 270 people, including 189 Americans.

Gadhafi has been relatively quiet lately. But now, he is defiantly declaring that he will stay in power no matter the cost. He has furiously urged his backers in Libya to fight the protesters who are seeking his ouster.

It remains to be seen whether Libya will remain a dictatorship, and what the turmoil there may do to the balance of power in the region.