What the Libyan situation means for gasoline prices. #rsrh

Link: What the Libyan situation means for gasoline prices. #rsrh

Clipped from www.nytimes.com

Why the Disruption of Libyan Oil Has Led to a Price Spike

Europe is most immediately affected by the Libyan crisis. More than 85 percent of Libya’s exports go to Europe, with more than a third of that going to Italy. Most of the rest goes to Asia. About 5 percent is sent to the United States.

ENI, the Italian oil company, Repsol of Spain, Total of France, Statoil of Norway, and BASF, the German chemical and energy company, have halted much if not most of their oil production in Libya and moved personnel out of the country.

In a research note, Barclays Capital estimated that around one million barrels a day of production had been shut down, or more than half the country’s total. Much of Libya’s oil producing capacity and its port facilities are in the eastern part of the country, where the government has lost the most control.

That leaves the eyes of the oil world on neighboring Algeria, another country with a history of unrest. Algeria is the seventh-biggest source of American oil imports.

“You have a powder keg in Algeria with social problems, ethnic problems and an Islamist organization blended together and overlapping,” said Michael J. Economides, a professor of engineering and energy economics at the University of Houston. “Many refineries would go into paroxysm if they lose Libyan and Algerian oil.”

Most Middle East oil production is controlled by national oil companies that operate as virtual state agencies and coordinate their security needs with the national militaries.

But that is not the case in either Libya or Algeria, where American and European oil companies have invested heavily over the last decade to bolster production that had been lagging. Foreign companies have shown in Libya, and to a lesser extent in Egypt, that they will shut down exploration and production and close their offices rather than jeopardize the safety of their employees.

Read more at www.nytimes.com

This entry was posted in Uncategorized. Bookmark the permalink.