Wednesday, July 3, 2013

Oil: Egypt - The Alarm Call

(Drivebycuriosity) - Today the price of oil rose sharply. According to the media the market is responding to the crisis in Egypt. It is said that the turbulences in the North African Country are stimulating fears that the supply of oil from the Near East (the largest oil producer of the world)  could be disrupted. Oil is continuing a rally that already started in April (plus 20% since then) caused by violence in Syria & Turkey that also induced speculation on oil supply disruptions.

The recent oil price rally is an alarm call. It shows that the civilized world is too dependant upon oil supply coming form unruly regions like the Near East. High & rising energy prices are slowing down the already sluggish word economy.

But there is an answer: Fracking. U.S. oil production is rising fast thanks to the new exploration technique. Fracking lessens the U.S. dependency on global oil supply and makes the country more resistant against a geopolitically caused energy shortage.

But there is a lot of political resistance against fracking in the U.S. and even more in Europe. Opponents claim that this technique is endangering the environment. I believe that the risks are manageable thanks to the technological progress. The world needs more oil supply from politically stable regions like the U.S. and Europe. This would curb the economic damages caused by the ongoing speculation on a possible geopolitical oil supply shortage.

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