With Unrest in Middle East, Oil Flirts with $100

By · February 22, 2011

Gadhafi and Umbrella

Appearing on state television with an oversized umbrella, Libyan leader Moammar Gadhafi announced that he will “stay to fight the dogs” and die a martyr if necessary.

As violence escalates in Libya, crude oil futures hit a two-year high of US $98.48 a barrel on Tuesday, sparking concerns that the price at the pumps will also rise. AAA says gas prices average $3.17 nationally for a gallon of regular. Forecasters see gas headed toward $3.75 a gallon by Memorial Day.

Libya, Africa’s largest oil-producing nation, exports about 1.5 million barrels a day. The unrest in Libya has caused about 50,000 barrels a day of oil output to be shut down, according to the International Energy Agency. The rise in oil prices reflects market concerns that unrest could continue to spread throughout the Middle East.

If violence continues in Libya, and more oil supply is cut off from Western countries, the price for a barrel could break the $100 mark.

In an effort to calm the market, Saudi Arabia said it can easily compensate for any shortages in the world's oil supply due to the upheaval in Libya. Paris-based International Energy Agency also offered reassurances. In a statement Tuesday, the agency said that it “stands ready, as always, to make oil available to the market in the event of a major supply disruption if alternative supplies cannot readily be made available via normal market mechanisms.”

If dissent reaches Saudi Arabia, oil prices could spike to record levels, making this week's rise appear modest. Saudi Arabia produces about 10 percent of the world’s oil supply.

The price of gasoline is the single most significant factor related to consumer adoption of more fuel-efficient gas-powered cars such as hybrids, and pure electric cars that run on domestically supplied electricity instead of petroleum.

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.