brickcityman (< 20)

Waiting For Gadhafi

March 04, 2011 – Comments (0) | RELATED TICKERS: OIL , DES , POT

As the "king of kings" mo-mo continues to lose his mo-jo one has to wonder... What next?  Personally I think the longer this drags on the better things might ultimately be for the status quo in the region (note that is not a comment on the status quo, just an observation).

So far it seems that the intense focus on one despot at a time has had the effect of holding off widespread challenge to other regimes.  It's almost as if other revolutionaries are just biding their time awaiting the limelight.  Or perhaps this is just a byproduct of the way media covers other nascent protest movements.  Never-the-less it doesn't seem likely that another regime will fall until after the Libyan turmoil reaches a conclusion of sorts.

The reason I think continued turmoil in one area bodes well for the rest is dual fold.  On a simplistic level being forced to wait for your moment the international stage does tend to erode morale, while also buying time for your movment to be undermined.  But perhaps less obviously the ensuing rise in oil prices provides each resource rich regime with a little more cushion with which to placate their masses.  

... It's for this reason, coupled with the eventual onset of seasonally oppressive heat, that I think we may soon start to see a waning in the revolutionary movements but NOT a respite from higher oil prices...  After all, if you've had to make financial concessions to keep a "swing" segment of your population off the streets you must fund those commitments from somewhere.  

Surely this will all be rationalized away as positive sign that petro dollars are finally being funneled to the aid of the people.  Or perhaps more dubiously as a lucky coincidence with respect to growth in global demand.  Either way my guess is 100$ oil might stick around for a while longer than many expect. 

So the question now becomes...  Will we discover just how levered the U.S. economy is to the price of oil?  And will we like the answer to that question?  The last time oil prices were this high (and rising) was the spring of '08 and alot of bad things happened thereafter.