And Oil Goes Up as 'The Democratic Wave of the Middle East' Continues

While it may seem that I may be making light of the situations in the Middle East, that is far from my intention. One of my earliest memories as a child was having my parents call me upstairs to watch the Berlin Wall being torn down. My father said he wanted me witness history. I didn’t appreciate what I was watching until long after the German Olympic team competed as one nation. For this new crop of youth, Generation Z, may be seeing a similar momentous event; The Democratic Wave of the Middle East. While this is actually happening, the commodity associated with the region, oil, is surging. The change in the socio-political structure has investors and consumers worried about supply disruptions.

Spot price is what one should value gold and silver, as there are rarely contracts for the precious metals. However, in the consumables, oil, lead, cotton, wheat…futures drive the price. Brent crude, the biggest of the many major classifications of crude oil, traded as high as $106.05. It may be President’s Day in the US, but last I checked, Washington and Lincoln were only American heroes.

Oil futures for April delivery were up $5.68 (6.33%) at $95.39. Oil futures for March rose $5.22 (6.06%) to 91.42. This surge today is due in part to the front-month contract expiring Tuesday, but more practically are the result of the recent Libya affairs, as civil unrest has threatened the 42-year rule of the country’s leader, Moammar Gadhafi.

Libya is the fourth largest oil producer in Africa, producing 1.789 million bpd, after Nigeria (2.211 million bpd), Algeria (2.125 million bpd) and Angola (1.948 million bpd), but has the largest proven reserves any nation of the continent. It is interesting to note that it is one of the 12 members of the Organization of Petroleum Exporting Countries (OPEC). [OPEC members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.] Reuters reported Monday, citing Al Jazeera television, that production at Libya’s Nafoora oilfield was halted as demonstrations intensified in Libya over the weekend.

Further to the evolving list of nations in the Middle East and North Africa, Moroccan citizens have begun rallying over political reform and the powers of King Mohammed VI.

With most of petroleum producing nations facing enormous changes, there should be more of a drive for domestic and alternative energy sources. Could this re-spur the alternative energy push? Possibly. Hopefully. Unfortunately, the bottomline consumer will notice the change only when it hits their wallet, like if (and when) gasoline hits $4+ again. Natural gas is a very viable alternative and is everywhere, and back to a common theme of my writings, uranium can create enough energy to satisfy core demands.