Egypt & oil - Jan 29
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CNBC anchor implies US must support dictators to keep cheap oil flowing
David Edwards and Stephen Webster, The Raw Story
CNBC contributor Erin Burnett said Friday that oil prices would skyrocket if countries in the Middle East broke out from under the rule of brutal dictators.
Appearing on a Friday broadcast of MSNBC's "Morning Joe," Burnett said that the ongoing revolution in Egypt could threaten US interests in the region due to Egypt's history as an ally on matters pertaining to Iran, Iraq and Afghanistan.
She added that as one of the most developed economies in the Middle East, it was surprising to see many of the society's wealthiest individuals supporting regime change. Tens of thousands of protesters across the country have taken to the streets the last few days, demanding President Mubarak resign.
"One more thing," Burnett remarked. "If this spreads, the United States could take a huge hit because democracy in a place like Saudi Arabia, you've talked about who might come in power, what that means for oil prices. They're going to go stratospheric."
(28 January 2011)
Oil prices climb on unrest in Tunisia, Egypt, Lebanon and Yemen
Ronald D. White, Los Angeles Times
Traders are buying up futures in case the anti-government sentiment disrupts output in the area's oil-rich countries, analysts say.
Oil prices surged Friday as concerns mounted that anti-government protests in Tunisia, Egypt, Lebanon and Yemen could affect Middle East oil production. If that happens, analysts said, oil prices could quickly rise to $130 a barrel.
The protests sent crude oil futures for March delivery up $3.70, or 4.3%, to close at $89.34 a barrel on the New York Mercantile Exchange.
Analysts said traders were buying up oil in case the anti-government sentiment spreads and disrupts oil output. The buying not only reflected fears about immediate oil supplies but also whether new governments, if they ascend to power, would be friendly to the U.S. and other western countries.
(29 January 2011)
What’s behind Egypt’s Problems? How do they affect others?
Gail Tverberg, Our Finite World
At least part of Egypt’s problem is that the government has in the past threatened to reduce food subsidies. Now it planning to hold food subsidies level and raise energy subsidies, but it is not clear that the dollar amount of subsidy will be enough. The government is taking steps to make food and energy affordable for most, but there is worry that it will not be enough.
Egypt’s Declining Financial Situation
There is a good reason why one might expect Egypt to start running into problems with energy and food subsidies. It own financial situation is declining, at the same time that the cost of food imports is soaring. If we look at a graph of Egyptian oil imports, exports, and consumption (thanks to Energy Export Databrowser, which graphs BP Statistical Data), we find that Egypt’s oil use has been rising rapidly, at the same time the amount extracted each year is declining.
Starting about 2010 or 2011, Egypt will change from an oil exporting nation to an oil importing nation, if there are imports available on the world market. The catch is that Egypt isn’t the only one with declining oil production–world oil production has been approximately flat since 2005, and the countries that produce the oil are using more and more of it themselves. The result is that there is less oil available for export, even as countries like Egypt need more.
The oil that Egypt exports provides funds for the subsidies that it offers, so reduced exports means less funds available for subsidies. Egypt has recently been able to ramp up natural gas exports, so the natural gas exports have allowed the subsidies to remain in place to date:
(29 January 2011)
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