War in Libya May Boost Gasoline Prices

by: Bob van der Valk

The other shoe will drop in world oil markets this week after coalition forces headed by England, France, Canada and the U.S. attacked Libya over the weekend in an attempt to topple the Gaddafi regime. Crude oil prices may increase $10 a barrel and fuel prices by 25 cents per gallon. This is based on the possibilities Moammar Gaddafi will avenge the bombings with retaliatory terrorist acts on other countries’ oil fields.

The price of gasoline and diesel per the AAA Daily Fuel Gauge Report is:

National Price Avg. as of 3-20-11

Regular

Diesel

Current

$3.548

$3.933

Yesterday

$3.542

$3.930

Week Ago

$3.557

$3.925

Month Ago

$3.156

$3.548

Year Ago

$2.818

$2.939

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The average price of $4 per gallon gasoline will be surpassed and U.S pump prices will go to historical record highs. Crude oil prices last week show the wild gyrations with unsettling news from Japan at the beginning of the week keeping traders nervous:

Crude Oil

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3/8/11

3/9/11

3/10/11

3/11/11

3/14/11

3/15/11


WTI-Cushing, OK

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105.06

104.39

102.73

101.14

101.2

97.23

Brent-Eur

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112.32

115.19

114.07

114.07

112.95

111.11

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The Central Intelligence Agency released a map in 2009 under the Freedom of Information Act showing the countries in the world with the most proven crude oil reserves.

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Click to enlarge

The majority of the countries shown in dark blue, including Venezuela, Saudi Arabia, Libya, Nigeria, Iran, Iraq and Russia, are not necessary friendly to us. Canada is the only country we can count on to continue friendly relationships with us and it also has the capacity to deliver more crude oil to the U.S. within a short period of time without the interruption caused by world events.

Gaddafi has announced that he will not leave Libya and seems to be willing to suffer the same fate as Saddam Hussein. The U.S. first sent troops into Iraq in 1991, and 20 years later, the U.S. is still there trying to install a democratic government. Gaddafi is bound and seems determined to take a lot of innocent people with him on the way to the eventual demise of his regime.

The longer the stalemate, the more likely crude oil prices will spike.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.