It is a truly sobering thought to get your head around: What appears to be a nominal jump in prices—ten dollars a barrel—could offset a public policy initiative that was political wrenching for the country.
No debate, no discussion.
Poof: $120,000,000,000. Gone. Just like that.
What may be worse is this: The events in Libya and Egypt, even if they turn into best case scenarios, will still cause swollen energy prices for some time to come.
As the Times explains:
"Even if energy costs don’t rise higher, lingering uncertainty over the stability of the Middle East could drag down growth, not just in the United States but around the world."
Daniel Yergin, whose heavy weight book 'The Prize' became required reading for anyone interested in the energy markets in the early nineties, encapsulates the uncertainty—and the risk—thusly:
"We’ve gone beyond responding to the sort of brutal Technicolor of the crisis in Libya," said Daniel H. Yergin, the oil historian and chairman of IHS Cambridge Energy Research Associates. "There’s also a strong element of fear of what’s next, and what’s next after next."
And so on.
The message is clear. Major political events in oil producing countries (Libya), and in oil transporting countries (Egypt), are not simply one off events.
Nor can 'favorable outcomes', after the initial instability has past, easily placate the energy markets.
Egypt and Libya—and whatever may come next—represent durable challenges for the global economy.
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