On March 17, 2011, the United Nations Security Council passed Resolution 1973 which, as Bloomberg News states, “establishes a no-fly zone over Libya,” and authorizes member states “ to take all necessary measures… to protect civilians and civilian populated areas under threat of attack.” Although a no-fly zone might help even the odds, it would most likely lead to more fighting and a greater number of casualties.
As of a result of this United Nations sanctioned military intervention, oil has risen to the highest price in almost 30 months. CNN states, “The rising gas prices could dampen the nation’s economic recovery. Gas demand — one of the reflections of the American economy — has been growing at a rate of 1%. Higher prices today are certainly capable of halting that gasoline demand growth, which would reflect bad news in the economy.” To be more specific, oil prices have jumped about 24 percent since the middle of February as the Libyan revolt began to threaten the country’s oil fields. The clash between Muammar Gadhafi and the rebels shut down most of the country’s oil production, which had supplied nearly 2 percent of world demand. Many experts speculate that Libya’s exports will stay offline for months. Bloomberg News reported, “Oil rose 0.7 percent as coalition forces targeted tanks, artillery, supply lines and communications points,” said U.S. Rear Admiral Gerard Hueber. Prices have advanced 16 percent this year as unrest spread from Tunisia, Egypt, Yemen, Bahrain and Syria.”
Not only has oil production slowed down due to our military intervention, but prices have also been affected by the current crisis in Japan. The 9.0 magnitude earthquake and the tsunami wreaked havoc on the world’s third largest economy, and oil prices surged even though Japan’s refineries quickly went back online. The U.S. government has announced that crude oil has increased in price because gasoline stockpiles have fallen by 5.3 million barrels. “Prices are moving up because of the fear premium,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “Oil inventories continue to build, but nobody cares because they are afraid about what’s taking place in the Middle East. The fundamentals don’t matter right now.”
The rise in oil prices could impede the economic recovery needed in the United States. Scott Anderson, a senior economist at Wells Fargo explains, “Oil prices are even more of a concern to the U.S. outlook than what’s going on in Japan right now, [because] the consumer is still working to recover from the excesses of the financial crisis.” Experts and investors have begun to worry that as the fighting intensifies in the Middle East, the global oil trade could worsen. Experts are keeping a close eye on Saudi Arabia, which has sent to troops to Bahrain to help quell anti-government actions. Tensions between Saudi Arabia and Iran, each of which is supporting a rival group in Bahrain, could turn into outright conflict.
The new spike in oil prices comes not from natural causes, but from people. The armed struggle in Libya and the revolutions in the Middle East have shocked international oil markets and it is evident here in America at the gas pump.
Jocelyn is a Junior in Eleanor Roosevelt College majoring in International Relations.