Monday, March 7, 2011

Oil at a 2 and Half Year High

Due to the problems in Libya and possible supply disruption, oil is now trading at $106. I read that for every $1 increase in oil prices, it translates to a 2 cent increase in gasoline at the pump.

Although Saudi Arabia has said that it will make up the loss, the real problem is the unrest in the Middle East. It is just a matter of time before rioting starts in Saudi Arabia. Revolutionaries have called for March 7th to be a "day of rage".

If the Saudi government reacts like other nations, it will be like pouring gasoline on a fire. If there is a supply disruption in Saudi Arabia, we can easily see the price of oil go to $200+ a barrel.

We need to drill now and everywhere. I honestly believe that the economy cannot handle this problem well. It will plunge us into an economic meltdown the likes we have never seen.

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