Oil Prices & the Crisis in Libya & the Rest of the Middle East

When I bought my car on March 2008, I felt for the first time the reality of oil prices soaring. From a level of just below $100 a barrel, oil prices went up to almost $150 a barrel in the world market. Previous to that moment, I did not care much about the price of oil. I was not paying for fuel since I did not own a car then. 

Although my fare during my commutes probably changed with the movement in oil prices, I did not notice it nor did I care much about it. Not until I had to buy gasoline for my own car. With a 50% increase in oil prices, gasoline prices also shot up a similar percentage.

After that oil debacle, a financial collapse of the world economy ensued on the same year with catastrophic effects. Companies closed down including the one I worked for. I lost my job but I still retained my car. I remember seeing signs on many vehicles saying that they were “for sale”. Owners of vehicles felt the burden of higher fuel cost and decided to let go of their liabilities. 

A lot of talk was being done on developing alternative fuels. Several companies invested in other forms of energy such as solar, wind and nuclear energy. But with production all over the world cut significantly due to the economic downturn, demand for oil dropped resulting to cheaper gasoline as well. This halted the euphoria on alternative fuels and brought back oil from its near death.

Two years and several billions in stimulus packages later, the economy of the world started picking up and with it the demand for oil. A steady inch-by-inch increase in oil prices is being experienced until it was disrupted by yet another important set of events. The Arab world was shaken by a wave of protests crying for political reforms. 

Starting in Tunisia followed by Egypt, Libya, Yemen, Bahrain and Syria, the people of the Middle East wanted to assert their rights and freedom. Unfortunately, not all of these protests were peaceful. Libya, in particular, stands out as the most violent to date with civil war now under way.

Before the crisis in Libya started a month ago, oil was just $85 a barrel. It now stands at $103 a barrel with the conflict in Libya disrupting productions and investors’ confidence in the market. Naturally, gasoline price is keeping pace and has now increased significantly. Many people are hoping that this crisis will end soon in order for oil prices to go back to normal so that they can stop worrying how to save electricity just to get by. 

Unless there is a deliberate move to steer away from oil as the main source of fuel, we will go back to the way we used to be as oil prices go up and down. Alternative fuels will not take-off. Unless there is a change in energy policy, the world will be at the mercy of oil producing countries and whatever might happen to them. We have seen how unsustainable the current situation can be, we need to act to change it or accept the consequences of doing nothing.

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