Crisis In Egypt Impacts Oil Prices
January 30, 2011, 10:14 PM
On Thursday, AAA of South Dakota expected gas prices to go down, but Egyptian unrest is keeping oil prices up. Concerns about instability in the Middle East means KELOLAND drivers will pay.
Just days ago, lower oil prices offered hope for drivers paying about three dollars a gallon for fuel, but that didn't last long.
"On Thursday, crude was at $85 a barrel. That's the lowest that we had seen in several months. That turned on a dime. On Friday, back up to $90," AAA's Mark Madeja said.
Madeja expected gas prices to drop by five or ten cents a gallon. That was before Egyptian riots sparked the rebound. Egypt doesn't supply much of America's oil, but surrounding countries hold a significant supply.
"One event like this can basically blow up the whole thing. People right now are concerned about a domino effect," Madeja said.
It's one that could ripple into Saudi Arabia or Libya. Medeja says it's been years since a social crisis directly changed crude costs. He says this week will determine how much drivers pay at the pump.
"All eyes are going to be on the market tomorrow and the first part of this week to see what happens. Right around $90 a barrel, we'll stay where we are: $2.99, $3.05, somewhere in that neighborhood," Madeja said. "However if further escalations continue, we could see a knee-jerk reaction."
But Madeja says it's just too soon to know if gas prices will creep up in the coming weeks.
"Right now, we're still in the speculation, rumor, innuendo, and fear stage. We'll see if that plays out. Prices might not do anything. We'll have to see," Madeja said.
Madeja says other major world events have impacted the price of oil and increased gas prices. But events like Hurricane Katrina shut down production and created a definite supply problem.
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