Libyan Unrest Tips Oil Price Increase

With no one knowing what the uprising in Libya will mean to that country's oil production, crude oil prices jumped significantly.

February 23, 2011

FALLS CHURCH, Va. - The populist uprising in Libya has fueled more than uncertainty about that country??s government ?" Libya??s oil production could be in jeopardy as well, WUSA-TV reports. The unrest in Libya triggered an increase in crude oil prices on Monday.

That could mean higher gasoline prices quickly. "A lot of our members today were scrambling for product. Even though most people had today off, they were out looking for cheaper product in anticipation of wholesale prices increasing dramatically [yesterday]. They want to have the cheapest price on the block ahead of these wholesale price increases that are coming," said Jeff Lenard, NACS spokesman.

Convenience stores sell around 80 percent of all U.S. gasoline sales. "Crude oil prices are up about $4 a barrel. That equates to about 10 cents a gallon. No one wants to pass on that 10-cent increase tomorrow. No one, probably, will. What they'll probably try to do is fight for product today, pass on that increase as slowly as they can," said Lenard.

"Libya is the latest domino in the Middle East. We don't know where else it could spread. If it gets to Saudi Arabia, that increases the complexity ten-fold. It could dramatically change the situation," he said.

Because of higher demand worldwide, gas prices were rising even before Middle Eastern countries experienced civil unrest. On the President??s Day holiday, the national average for a gallon of regular gasoline reached $3.17, compared to $2.64 last year on that date, according to AAA.

View Jeff Lenard??s interview with WUSA-TV.

The 2011 NACS Fuels Report is now available.

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