Casey Gonzalez never expected recent protests in Libya to affect her daily life – until she had to begin budgeting more strictly just to pay for gas.
Though Libya supplies less than one percent of imported oil to the U.S., gas prices have risen over 44 cents per gallon in the past month, partially due to political upheaval in Libya and as of Monday, the national average price of gasoline was $3.49 per gallon and Tampa’s average was $3.51 per gallon according to tampagasprices.com.
Gonzalez, a junior majoring in architecture, is one of many students finding themselves strapped for cash due to the price increase.
“I’ve been stretching (the time between fills),” Gonzalez said, who most recently filled her Honda Pilot tank last week. “I’m a commuter and it makes things more difficult.”
As the violence in Libya ensues, she said her half-an-hour commute is cutting into other areas of her life, such as spending money on food. Her class materials – costly architecture supplies – have become unaffordable.
On Feb. 17, protestors gathered in Libya’s largest cities during the ‘Day of Rage’ to stand against Col. Muammar al-Qaddafi, Libya’s dictator who has held rule for the past 41 years, according to the New York Times.
Qaddafi’s forces have since retaliated against protestors with violence. United Nations Secretary General Ban Ki Moon has reported that at least 1,000 people have died and 200,000 have fled the country since the protests began.
The protests, which have spanned three weeks, have already outlasted the movements in Egypt and Tunisia that were resolved within days. A March 7 article from The Associated Press predicted the revolution in Libya could last for months.
Since violence began escalating one week ago, crude oil futures have risen to $105.44.
According to ABC News, while Libyan oil accounts for less than 1 percent of the global oil production, crude oil production in Libya has fallen by approximately 500,000 to 750,000 barrels of oil produced per day. Prior to the protests, Libya produced approximately 1.385 million barrels of oil per day.
Senior Petroleum Analyst Patrick DeHaan of Gasbuddy.com, a website that tracks data of gas prices in every major U.S. and Canadian city, said the reduction in oil production is not the only thing that consumers should be concerned about.
“The concern is not only that Libya’s oil production and exports will be cut or reduced, but also that this violence that’s been jumping around all over the Middle East may finally impact countries we rely heavily on for oil production, mainly Saudi Arabia,” he said in an interview with The Oracle.
DeHaan said Libya’s exports to the U.S. are minimal compared to Saudi Arabia’s, but are more sought after. The U.S. imports two million barrels per month from Libya and 30 million barrels per month from Saudi Arabia.
“(Libyan oil) is a light, sweet crude oil,” he said. “It’s easier to refine the Libyan crude oil (so) it’s easier to produce gasoline. When you take this type of crude oil off the table, essentially European sources that typically get that crude oil are now looking for other sources of such a type of crude oil and it’s hard to find. All this pressure amounts to higher prices at the pump, (along with) the increase risk of doing business, the loss of Libyan oil production (and) the violence that could spread to Saudi Arabia.”
USF economics professor Christopher Thomas said he believes the price impact has less to do with the actual reduction of oil supply and more to do with the actions of speculators in the financial sectors anticipating future gas prices.
“We really aren’t short of crude oil right now,” he said. “This is largely a demand-side phenomenon because of the danger that prices might go up because of this violence. Speculators are buying up contracts at today’s low prices, hoping to make a profit on tomorrow’s higher prices if indeed the violence escalates.”
The price of crude oil rose 53 cents per barrel Monday, despite U.S. Chief of Staff William Daley announcing Sunday that the administration plans to tap into the U.S.’s Strategic Petroleum Reserve, the U.S. emergency oil reserve. This plan would add to the supply of oil in the market and relieve the pressure that’s pushing prices upwards.
Thomas said the decision is meant to send a message to the economic market that the emergency reserve could help the price issue.
“What he wants to do is send a signal that as the man in charge sending the signal, he’s willing to do it,” Thomas said. “He’s not going to hesitate if, in fact, we do get a real crude oil shortage. He’s hoping to steady the speculative market and calm the fears that we would in fact see a reduction in crude deliveries. I don’t think he ever expects that he will have to do it, but he’s signaling to the market that he’s willing to. I think it’s a psychological move and a smart one.”
DeHaan said he expects the trends in rising prices to continue as the violence does.
“It certainly would appear that the pressure on oil prices to rise will remain until there is resolve in the Middle East,” he said.
Yet, in the midst of a recovering economy, rising prices may have graver consequences.
“If it goes much higher than this with the world economy still very weak and trying to recover from the recession, we’re moving into unchartered territory,” Thomas said.
For Gonzalez, who said she is finding solutions to make fiscal ends meet, relief couldn’t come fast enough.
“We’re college students,” she said. “Money is tight.”