However, should this vast oil resource fall to a new government who was not as responsible and temperate, we might see prices that today would be unimaginable. Could that happen? I believe so.
Today, Henry Bloggett on Tech Ticker/Yahoo Finance interviewed Fadel Gheit with Oppenheimer & Co. who unequivocally said the Royal Family would fall. Scared yet?
So let's say that Fadel is accurate with his prediction. Do you share the opinion that whomever replaces the Royal Family will be significantly less hospitable to the United States, Europe and Israel? I do.
What does that mean for our "recovery." In the last couple weeks we have seen gas go up by double digit percentages and that was with Libya's 2% of the world production effected. If 10% (Saudi's percentage) were to go off-line and radical regime were to take over, could $8 or $10 per gallon gas be out of the question? I think not. The recovery would end with a bang. Inflation (if gas were included in the calculation) would jump into regions we have not seen since the 70's or maybe even worse.
Let's hope that Fadel does not know what he is talking about! Here is a summary of what he told Henry:
As Libya descends into full-on civil war and protests spread across the rest of the Middle East, all eyes are focused on Saudi Arabia, which produces more than 10% of the world's oil.
So far, protests in Saudi Arabia have been limited. But our guest, Fadel Gheit, a managing director at Oppenheimer & Co., thinks that may soon change.
The root cause of the Middle East unrest, Ghait says, is inequality. Decades of autocratic rule have increased frustration that the vast wealth of the oil-producing countries in the region is in the hands of a small privileged few, and this frustration is finally boiling over. Although governments are making small concessions designed to quell this frustration, Gheit believes the yearning for freedom and democracy is unstoppable.
He says it is hard to predict whether the violence that consumed Libya will spread to Saudi Arabia and other countries, but he believes the protests will. And, eventually, he believes, the regime will fall.