$4.00 a gallon for gasoline became a reality here. Covington prices hit $4.00. Fuel prices were predicted to rise as soon as hostilities broke out in Libya, however the catastrophe in Japan kept prices down. Now with Japanese industries reopening plants, the increase demand for oil means higher prices at the pumps.
According to Businessweek, oil declined for the first time in four days in New York after Saudi Arabia, the world’s biggest exporter, said the global market has adequate crude supplies. Crude oil for May delivery slid as much as $1.19 to $108.47 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $108.66 at 10:55 a.m. London time.
The no-fly zone has turned the conflict in Libya into a ground war. Gaddafi forces are using rockets and mortars to pound the rebels in Central Libya, especially around the city of Misrata. The rebels lack the logistics and organization to move out. The fighting is centered around the oil producing region which has halted Libyan oil production. This leaves the remaining OPEC producers in position to demand more money for their oil.
Now that the Libyan conflict is ground based, and the rebels are stalled, the question is when does NATO/US start moving some ground support? Early in the conflict we heard talks about the United States supplying arms to the rebels. Apparently those aren't enough. Rising oil prices could lead European leaders and the Obama administration to move forces in as a "police action" to secure the oil fields. The same justification was part of the reason why coalition forces were sent into Kuwait. Yes Kuwait had been invaded by Saddam Hussein but in so doing, he controlled a significant amount of the world's crude oil. Libya produces around 2 percent but as we now see, even two percent can create a significant impact at the pump.