How unrest in Egypt affects us all

Reading this headline in the WSJ Crude Jumps 4.3% on Egypt Protests, we can see how the turmoil on the streets of Egypt may soon have an impact on us all wherever we are.

“Egypt produces roughly 673,000 barrels a day, according to the Joint Oil Data Initiative, a global oil database, ranking it 21st among the world’s oil producers. Still, the country is home to two of the world’s key energy supply routes: the Suez canal, a transit point for oil and fuel shipments from the Persian Gulf to the Western Hemisphere, and the 200-mile-long Sumed pipeline, an alternative transit route to the canal. About one million barrels of oil per day was shipped through each route in 2009, according to the U.S. Energy Information Administration.

More worrisome than disruptions to Egypt’s oil production is the prospect that the unrest spreads to other hard-line states in the region, such as Libya and Algeria, both members of the Organization of Petroleum Exporting Countries”

So with disruptions in supply and further upward pressure on oil prices from “positive economic data out of the U.S., raising expectations for higher fuel demand in the world’s largest oil consumer”, can we expect higher pump prices even with diesel and unleaded at over £1.40 per litre in some places of the UK?

With CPI at 3.7% and RPI at 4.8%, these external shocks can only place further cost push inflationary pressure on an already weak domestic economy. This radio 4 report from Sunday looks at some of the issues surrounding the rising cost of petrol and in particular the pressure the government is under to reduce the tax it takes (60%!) to help ease motorists’ pain.