OK, I do not normally do politics. But Moammar puts the tin in tinpot. Bombing your own people? Blowing up you own munitions stockpiles? Threatening to set the oil field on fire? Screwing with energy markets? There are any number of reasons to quit burning oil but he is reason number one.
Libya: Why the oil market is nervous
Click chart for oil and other commodity prices
By Ben Rooney, staff reporterFebruary 22, 2011: 9:42 AM ET
NEW YORK (CNNMoney) — Libya is the first oil exporting nation to be engulfed in the political upheaval spreading across North Africa and the Middle East, and investors are worried that further chaos in the region will drive crude prices even higher.
U.S. oil prices soared more than 7% early Tuesday, coming within $2 of $100 a barrel. That’s on top of the 6% surge on Monday. The price spikes follow violent protests in Tripoli, Libya’s capital, that claimed an estimated 200 lives over the weekend.
Libya produces about 2% of the world’s oil but is a major regional player. In 2010, the country produced about 1.65 million barrels per day, making it Africa’s third-largest crude producer, according to the U.S. Energy Information Administration. It also supplies several hundred thousand barrels per day of natural gas and other liquid petroleum products.
In addition, Libya sits atop large reserves of oil and gas that have yet to be developed. Libya holds around 44 billion barrels of oil reserves — the largest in Africa — according to Oil and Gas Journal, an industry publication.
By contrast, Russia produces 10.1 million barrels per day, while the United States produces 9.8 million barrels per day, according to the Energy Information Administration. Saudi Arabia, currently observing OPEC production quotas, produces 8.57 million barrels per day. Those numbers include oil from ethanol, natural gas liquids and other products.
The world consumes 87.5 million barrels of oil day.
U.N. sanctions in place since 1992 had prevented most Western oil firms from operating in Libya after agents from the country’s intelligence service were implicated in the 1988 bombing of Pan Am flight 103, which killed 270. The sanctions have left most of the country’s natural gas reserves, along with a lot of its oil, fairly undeveloped.
The sanctions were lifted in 2004, after Libya said it was disbanding its nuclear program and finished cooperating in the Pam Am case. In 2006, the United States officially took Libya off its list of states that sponsor terrorism. That opened the door for renewed investment in the oil and gas sector
Oil is verging on 100 $$$ per barrel and once it goes past that. Who knows. Please see the article for more balanced analysis. More tomorrow.