Oil Price, Secure Supplies and Libya's Impact

That the centrality of oil in the economies of Europe and the USA is shown in the reactions of the oil market to news that indicated the importance of the NATO intervention in getting Libyan oil flowing again. The shortfall in Libyan oil production was made up by the other OPEC nations increasing their supply.

Data produced by the journal United Explorations ( Oil Price and the Effect of the Libya War August 29 2011 ),

'The conflict in Libya started in protests against Gadafi’s regime in the eastern port city of Benghazi, and spread to Zintan, al Bayda and Quba. Since then, the oil price evolved from US$99 to a maximum of US$120.91 in April 28. A 21% oil price increase might seem big, but in fact it is huge.

Taking into account that the daily supply from the Organization of Petroleum Exporting Countries’ 12 members rose to 30.05 million barrels a day in July from 29.94 million in June, it means that the acquisition cost of OPEC’s daily oil production (responsible for 40% of world’s oil production) increased over US$657 million in just a couple of months. But as Gaddafi’s regime is closer to an end the oil price is having a small rest, with a 5% fall in August'

The NATO support for anti-Gaddafi forces was more concerned with stabilising Libya, one of the closet main suppliers of oil to European nations, and part of the geopolitical struggle for diversification. So that when one regime is destabilised, then others can step in to up production of this black engine blood of developed Western consumer economies.

Even so, at a time when the economies of the USA and Europe are faltering on the brink of a double dip recession, lower oil prices are a main objective of Western governments if economic growth is to be stimulated and "consumer confidence" and spending resumed to pre-2008 levels.

The impact of lower oil prices was cited as important In US News ( End of Libyan War Could Mean Lower Oil Prices August 22 2011 ) this was reported,

The turmoil in Libya greatly disrupted that country's substantial oil production and exports. Before the country's civil war erupted in February, Libya produced 1.6 million barrels of oil per day and exported 2 percent of global oil supplies. The conflict curtailed that supply by more than 90 percent. But with rebel forces apparently on their way to seizing control of Tripoli, the civil war appears to be in its final throes.

That could mean a boost to the U.S. economy in the form of new consumer spending. According to the American Automobile Association, gasoline is currently more than 85 cents per gallon more expensive than it was one year ago. For a person buying 10 gallons of gasoline per week, that is more than $440 extra spent on gasoline over the course of a year. A decrease in prices could significantly free up money for other parts of the U.S. economy.

Again, in the short term, lower prices alone will not regenerate economic activity. In the longer term they are an essential prerequisite of continued Western consumer activity and of global economic growth. The danger of the collapse of a leading oil producing state, as seems possible in any state in the Arab World at this moment, only further the quest for diverse supplies.

By use of military force and covert operations to be rid of regimes that oppose Western oil interests in ways that could prove this addiction to cheap petrol to be a rather lethal one.