Why Gas Is So Expensive Today (Hint: It’s Not Libya)
12th March 2011
It is true that the unrest in the Middle East and North Africa has had some impact on gas prices. Though Libya produces only 1.5m barrels of oil a day (more context on this number to come), the demand for oil, as a key input of production, energy, transportation, and the entire global economy is relatively inelastic. That means that even very small shocks to the supply of oil can ripple quite quickly and drastically through the world.
But are there other explanations for this recent spike in gas prices other than brown people looking for freedom?
I’m so glad you asked.
Because the real reason for the recent spike in gas prices has, at best, an attenuated, ancillary, and secondary relationship to the current unrest in the Arab world.
The primary party is Wall Street.
As Rahm Emmanuel so famously said, ‘Never let a crisis go to waste.’
March 14th, 2011 at 12:11
I worked in a refinery and happened to be meeting with the VP about 20 min. after a large thunderstorm had rolled through. While I was in his office, he got a call from the Wall St. Journal checking to see if the storm did any damage.
THAT’S how closely Wall St. looks for a reason to jump prices.