Oil hits $100 (in the US – $111 in London)

Wow – that was quick.  See how tenuous oil is these days.  Libya is responsible for less than 2% of the global production. What will happen if supply is actually disrupted in a bigger supplier?

Oh, but surely this is a blip, and will be over soon, and then we’ll see oil prices rise more slowly.  And then all will be well.

Could it also be that this is what happens in the peak oil time?  High oil prices –  especially when combined with the effects of climate change – makes food more expensive in nations that are seriously overpopulated relative to their local carrying capacity.  Oppressed people who are hungry make a dangerous combination.   Peak oil prophets have always said that volatility – in prices, societies, economies –  would be one of the hallmarks of the peak oil time.  Looks like the storms are brewing from Africa to Europe to Madison.  Haven’t heard much from Asia in all this.  Will we soon?

Oil prices hit $100 per barrel

Libya revolt pushes oil past $100 per barrel for the first time since Oct. 2008

A sign advertises gas and diesel prices, plus gives an explanation to customers, at a service station in Easthampton, Mass, Wednesday, Feb. 23, 2011.

Oil prices rose past $99 a barrel on Wednesday as forces loyal to Libya’s Moammar Gadhafi clashed with protesters expanding their control over parts of the country. (AP Photo/ Shana Sureck)

Chris Kahn, AP Energy Writer, On Wednesday February 23, 2011

NEW YORK (AP) — Oil prices hit $100 per barrel Wednesday as forces loyal to Libya’s Moammar Gadhafi clashed with protesters expanding their control over parts of that OPEC nation.

In afternoon trading benchmark West Texas Intermediate crude for April delivery was up $3.48, or 3.7 percent, at $98.90 per barrel on the New York Mercantile Exchange. Prices climbed as high as $100 earlier in the day, hitting triple digits for the first time since Oct. 2, 2008. WTI has jumped 18 percent since Valentine’s Day.

In London, Brent crude added $5.33, or 5 percent, at $111.11per barrel on the ICE Futures exchange.

The rebellion in Libya, which has the most oil reserves in Africa, follows uprisings in other North African countries that have ousted leaders in Tunisia and Egypt. As protests widened in Libya, French oil giant Total said it started to wind down its oil production in the country, which produced an average of 55,000 barrels per day last year. That follows similar moves by other oil companies working in the country.

The country’s biggest oil producer, Eni, idled operations that produce 244,000 barrels of oil and gas per day. Spain’s Repsol-YPF and Austrian oil company OMV also suspended operations.

Barclays Capital estimates that as much as 1 million barrels per day has been shut down so far. In January, Libya produced almost 1.7 million barrels per day of oil and natural gas liquids, according to the International Energy Agency.

The production losses will be felt mostly in Europe. Ireland relies on Libya for 23 percent of its oil imports and 22 percent of Italy’s oil imports are from Libya. The U.S. imported only about 51,000 barrels per day from Libya, less than 1 percent of its total crude imports.

The International Energy Agency and Saudi Arabia have both pledged to make additional oil available to cover any shortfall in world supplies, but that hasn’t eased tensions in oil markets.

Larry Goldstein, a director at the Energy Policy Research Foundation in Washington D.C., said Libya’s oil is a high-quality variety that produces valuable petroleum products like gasoline, jet fuel and diesel. Some refineries won’t be able to run on Saudi Arabia’s lower-grade crude, so a sustained shut down in Libya could start a bidding war for comparable kinds of crude.

“That would raise product prices immediately,” Goldstein said.

Analysts say concerns about violence in North Africa and Middle East have added a “fear premium” of about $10 per barrel of oil. The rise has pushed retail gasoline prices higher in the U.S. despite ample supplies in most parts of the country.

Gasoline prices jumped 8.2 cents per gallon in the last month and $1.28 per gallon in the last year. The national average for a gallon of regular on Wednesday rose another 2.3 cents to $3.194, according to AAA, Wright Express and Oil Price Information Service.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said he expects gasoline prices will continue to rise in the next few months to a spring peak of between $3.25 and $3.75 per gallon. And energy analyst Jim Ritterbusch said he doubts that the national average will climb to $4 a gallon or higher, but he added that prices are difficult to predict because of the rapidly changing Middle East situation.

Shares of major oil companies rose in Wednesday trading. Exxon Mobil gained $2.09, or 2.5 percent, at $87.53. ConocoPhillips added $2.07, or 2.7 percent, at $78.68. Chevron rose $2.83, or 2.8 percent, to $103.15. Occidental Petroleum rose $1.90 to $104.04.

In other Nymex trading in March contracts, heating oil added 12 cents at $2.9250 per gallon and gasoline gained 12 cents to $2.8704 per gallon. Natural gas picked up 4 cents at $3.948 per 1,000 cubic feet.

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