With the crisis in Libya escalating, some oil analysts say Americans should expect to feel it at the...

1. Crisis in Libya Raises Fears of Skyrocketing Oil Prices
Causing Pain at the Pump
With the crisis in Libya escalating, some oil
analysts say Americans should expect to feel it
at the gas pump.
Reports are sketchy out of the North African
country since Western media is banned from
covering the turmoil sparked last week.
Anti-government protestors, encouraged by
demonstrations in Egypt that toppled longtime
dictator Hosni Mubarak, took to eaton hydraulic pump the streets demanding Libyan leader
Muammar al-Qaddafi reform the country's political system or step down. But Al-Qaddafi told the
world via state TV Tuesday he will do neither.
Meanwhile, reports continue to trickle out about use of excessive force against demonstrators by
government troops and mercenaries. A day laborer told Reuters that fighter jets are bombing crowds
in Benghazi and that more than 250 people have been killed in Libya's capital, Tripoli.
Libya is the world's 18th largest oil producer at 1.8 million barrels a day, with 1.4 million of that
exported. Ninety percent of Libya's oil comes from the eastern part of the country, a flashpoint for
much of the revolt at the moment.
And although most of Libya's oil goes to Europe, analysts agree it still affects the price of gas in the
United States, especially since Libya is one of the world's primary sources of the much-sought-after
light sweet crude, preferred by refineries.
"Tighter supplies of gasoline anywhere in the world will make the value of high-quality oils greater
everywhere," said Kevin Book, an analyst with ClearView Energy Partners. "Libya going offline could
put a much bigger stress on the refined products market."
Indeed, the unrest in Libya pushed oil prices up 9 percent Tuesday to $93.57 a barrel, the highest
since October, 2008.
The latest spike sparked fears that oil could surge closer to 2008 record levels when prices were
over $140 a barrel. There are some basic adjustments which can be madeto a typical
centrifugal or positive displacement pump. In pumps that have overhung impellers, replacing the
shaft with a solid one is a desirable adjustment compared to the typical sleeved shafts. Mechanical
seals are able to be enhanced with silicon carbide faces, and elastomers can be replaced with Viton.
In addition, magnetic bearing protectors would be a great improvement over the lip seals which the
vast majority of water pumps rely on to keep bearing sump oil clean.

2. That kind of increase could slow the US
economic recovery.
"For every dollar change in a barrel of oil
that works out to be 2.4 cents per gallon
of crude oil," said John Felmy, chief
economist at the American Petroleum
Institute.
But whether that gets passed onto the
consumer is another matter altogether.
"Refiners are like bakers, they don't
control the price of bread," Felmy added.
Average gas prices in the U.S. remained
at $3.17 a gallon Tuesday. But that's up roughly six cents from last week and one analyst says that's
partly a result of the Libya crisis.
Tom Kloza, chief analyst at the Oil Price Information Service, says there's typically an uptick in gas
prices come springtime, largely due to the low demand globally causing sellers to raise prices, but
the events in Libya and the rest of the Middle East are not helping keep prices down either.
"It's a catalyst that has moved up the schedule for what I call 'petronoia'," he said. "What surprises
me is not that this is happening but that it's happening in January and February." He predicts the
latest surge will contribute to pushing prices up to $3.50 - 3.75 a gallon by Memorial Day weekend.
And whether that goes any higher will depend largely on whether the current wave of unrest across
the Middle East will spread to Saudi Arabia, the world's number two producer and a major supplier
to the United States. "If Saudi Arabia remains stable, then everything calms down in the spring," he
added.
Book agrees, adding a Saudi shutdown would mean lines at the pump pretty quickly. "Maybe a week
before demand collapses and physical scarcity begins to rationalize demand," he said.
During a meeting of oil-producing nations in Riyadh Tuesday, Saudi Arabia responded to those fears
and also pushed OPEC nations help cover any disruption in the flow as a result of the Libyan crisis.
"OPEC is ready to meet any shortage in supply when it happens," the Saudi oil minister, Ali al-Naimi,
told the New York Times following the meeting. "There is concern and fear, but inline pump there is
no shortage."