Friday June 13, 2014

I've Been Thinking:

Oil is one of those commodities that fluctuates in price based on world events. Stability and security in the Middle East play a central role in the price of crude oil.

So when there is crisis and rampant conflict in areas close to major oil fields, the market responds. And that response is felt at gas pumps and in the wallets of people wherever they may live.

Iraq right now is a case in point.

Over the past few days the West has been taken by surprise as al Qaeda affiliated rebels have taken over cities in Iraq, some of them located in major oil region. Areas like Mosul and Kirkut have fallen to al Qaeda.

Capitalizing on the confusion of the moment, Kurds in Tikrit, Iraq have seized the opportunity to kidnap and grab Turks.

The only response available for the market is to increase the price of oil.

There is more to the story. If Western forces enter Iraq in an effort to bring stability or if Iraqi forces attempt to take back the cities - it will happen again. The price of oil and hence gasoline will increase again.

Either way, we the people lose. And just in time for summer vacations.

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