Everyone is talking about gasoline prices. We’re seeing oil prices rise and we’re hearing about $150.00 for a barrel of oil when we don’t really see signs of a robust recovery. Is there a reason behind these increases?
Don Good of the Good Oil Company in Winamac explains the prices at the pump.
“It’s the unrest in the Middle East,” explained Good. “The markets have really become divorced from the fundamentals of inventory and supply and demand. All of those things are still on a down side. If you simply looked at how much product we’ve got and demand is still down, it’s weak because of the economy, but there’s a lot of speculation on what’s going to happen in the Middle East. Libya is the number three producer and they’re starting to pull people from out of the oil fields and they’re starting to close down the ports. The fear is that will turn the spread into some of the other oil producers. Iran, Iraq and Saudi Arabia are all right there and so the anticipation is what is driving this market right now. It’s not what we have, it’s what could happen in the future.”
Saudi Arabia is the big player in the Middle East.
“Saudi Arabia is the largest producer,” continued Good. “They’re also very friendly to this country. If Libya shuts down and Saudi Arabia starts having protests, then I think we could really see some sustained price spikes. This is a spike and if this spreads out we could see the four and five dollar gallon of gasoline and $100 to $130 crude.”