The former president of Shell Oil says Egyptian President Hosni Mubarak’s decision not to resign could cause crude oil prices to spike Friday – and they could soar, if either forces loyal to Mubarak, or those protesting his regime, attempt to obstruct oil flow through the Suez Canal or the Sumed pipeline.
In an interview on the Fox Business Network Thursday night, John Hofmeister also noted the Obama administration’s restriction of drilling in the Gulf of Mexico is an added factor in what could become a scramble for oil, leading to higher gas prices at the pump.
“The crude oil price could jump $10, $15, $20 dollars a barrel, just over the events in Egypt – if there was contagion, it could go even higher,” Hofmeister said. “That would translate into about $3.50, $3.70 at the pump.”
After “Follow the Money” host Eric Bolling noted that when Mubarak Thursday said he would not resign, oil prices began to move up, Hofmeister said he expected the prices could spike Friday, because, “the uncertainty of all of this, of course, makes oil traders very worried.”
“But, on top of that, what we don’t know is which group – either the Mubarak group, or the protest group – might start leveraging the Suez Canal to put even more pressure on the president [Mubarak],” he said.
“The Suez Canal carries about 1.5 million to 2 billion barrels a day of often finished product through the Gulf [of Suez], on its way – or through the Suez Canal on its way – to Europe. And, so Europe is a big market, and we already know the Brent [oil] price, is well over $100, somewhat because of the uncertainties in Egypt.”
Hofmeister, who now heads Citizens for Affordable Energy, warned that disruption of the Sumed pipeline, which runs adjacent to the Suez Canal, could also cause oil traders to worry.
“The Sumed pipeline carries about 1.5 million barrels a day, and that too, could be a victim of the uncertainty, or the unrest, where either side could take an action against either the pipeline or the Canal, in order just to feed the confusion,” he said.
Bolling said higher gas prices “would trickle in to about everything we do, the food we eat, the corn, the wheat, the milk, everything.” Hofmeister noted the U.S. government’s restriction on offshore drilling has worsened the situation.
“But, the irony of all of this is that we’ve shut down the Gulf of Mexico – our primary source of oil – is shut down by the administration, and – guess what? – two of the rigs from the Gulf of Mexico are headed for Egypt, they can’t drill in the Gulf [of Mexico], they’re going to Egypt to drill.
“This is a ridiculous situation for the United States of America.”
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