Oil surges on rising crisis in Libya
Summary:
This article discusses how political conflicts in Libya are causing the oil prices to soar in many countries these past months. The last time that something to this scale happened that affected oil prices was in 1970 when there was a war between Israel and it Arab neighbours. These disruptions are causing many energy companies to pull out workers or suspend their drilling plans “to manage and secure safety” of their employees or shut down the whole production. Therefore, it will cut Libya’s output down by 6% which is equivalent to 100,000 barrels a day, because Cyrenaica is where 90% of exports occur and the heart of this recent revolt . Since Libya produces 2% of the world’s daily oil consumption, it will have a profound effect on the world’s economy.
Connections:
This article relates to Chapter 5’s economic indicators in various ways. First of all, these disruptions have caused many people to lose their jobs at the drilling sites. This will probably raise the unemployment rate, an economic indicator, if those people meet the criteria and are still continuing to look for work. Most people will start to experience structural unemployment due to troubles in Libya, so even if there is plenty of oil no company is willing to put their workers in that situation.Then, increasing oil prices will definitely affect the Consumer Price Index of many individuals since most people will use some sort of oil dependent transportation method or heating system. Therefore, the inflation rate, another economic indicator, will increase for many people around the world. Lastly, it will affect the overall GDP of several countries, because less oil will be imported. Thus, increasing prices that result from its scarcity will make people stop consuming as much gasoline. This will affect businesses and hereafter the GDP of the country. So as you can see, a conflict political that might somehow strain the economy can allow you to analyze the economic situation using various economic indicators.
Reflections:
As of right now, from the perspective of a teenager, this crisis doesn’t seem to affect me too much because my parents pay for everything. As you can see, there are a percentage of people who would not be affected by increasing oil prices. However, most of working force population will somehow be affected by this political strife that occurs in the Middle East and North Africa. Right now, only Libya is causing a disturbance in oil prices, but many are afraid that this chain would continue to other oil producing countries. If this chain effect continues then, many more people will experience structural unemployment. This is a terrifying thought, because it could lead to another global recession even though we recently experienced one caused by car manufacturers.
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