You have probably wondered when the turmoil in the Middle East will begin to effect the price of gas and, by extension, your costs of living.
It’s a fair question, and not one that many people are ready to tackle just yet. I doubt that President Obama is going to make it the subject of one of his weekend radio addresses. (But maybe the Congressional Republicans want to think about raising the issue’s profile. Congressional Democrats, too.)
What will be the economic effects for the US if, for example, the ruling family of even one even Arabian Gulf energy sheikdom is toppled from the throne, in a Tahir Square-style uprising? What will that do to the price of oil?
What if some prolonged unrest in Saudi Arabia means that the kingdom begins to pump less oil into the world economy?
Another question to think about — if the price of oil shoots up to $130, $140 or even $160 a barrel (crashing through the previous record of $147 in 2008) due to unrest in the Gulf , how will consumers perceive all those reporters, pundits and politicians who are cheerleading the protests wracking the Arab world?
Consumers in the US and other developed countries would most likely react with fury to any sudden ramping up of energy prices, whatever the cause.
Once he connects the unrest in the Middle East with energy price volatility, the average consumer’s view of the protestors driving that volatility will change.
That’s when things would really get interesting.
Would hard-pressed Americans (not to mention Canadians, Europeans, Australians, etc) demand that President Obama send US troops to intervene in say Kuwait, or Saudi Arabia or some other riot-wracked sheikhdom to restore order, protect the ruling family – and safeguard the flow of oil?
At what price for a barrel of oil would consumer demands for military intervention to end the unrest and bring oil production back online become politically irresistible?
$150?
$160?
$170?
Right now, this is a very hypothetical question that sounds like the plot of a TV Movie-of-the-Week. In six months, it may become much more concrete.
