UPDATE: Oil prices hit highest level since September 2008

Friday, March 4, 2011 | 1:15 p.m. CST

NEW YORK — Oil prices hit a 29-month high Friday after the government said the nation's unemployment rate fell to 8.9 percent in February.

The Labor Department said the economy added 192,000 jobs last month. That suggests more people will be driving to work at a time when world oil supplies are under pressure because of the Libyan crisis and unrest in the Middle East.

Benchmark West Texas Intermediate crude for April delivery gained $2 at $103.91 per barrel in New York. The price jumped to $104.64 per barrel earlier in the session, the highest level since Sept. 29, 2008.

Gasoline prices have shot up an average of 35 cents per gallon since an uprising in Libya began in mid-February. A gallon of regular unleaded gained another 4.4 cents overnight to a new national average of $3.471 per gallon, according to AAA, Wright Express and the Oil Price Information Service.

Pump prices are soaring much faster than analysts expected, as a wave of rebellions sweeps across North Africa and the Middle East. Prices should peak between $3.50 and $3.75 per gallon this spring, according to Tom Kloza, OPIS chief oil analyst.

In Libya, tensions escalated further on Friday as forces loyal to Moammar Gadhafi used tear gas to repel protesters in Tripoli. Most of Libya's oil production has been shut down because of the crisis, and experts say the country's oil fields will be threatened as long as there's no clear leader in charge.

Saudi Arabia has increased production to make up for the loss of Libyan crude, but a lengthy struggle could put significant pressure on world supplies. Traders are still concerned that the unrest in North Africa, which already has ousted leaders in Tunisia and Egypt, will encourage pro-reform protesters to dig in and further challenge neighboring regimes in the Middle East.

North Africa and the Middle East are home to the largest oil producers in the world and export a quarter of the world's oil.

Oil prices rose Friday as anxious traders prepared for the weekend. Two weeks ago, oil surged more than $7 per barrel in electronic weekend trading, and prices are again climbing on the expectation that oil will jump before Monday trading begins.

Oil is getting more expensive as the economy of the world's largest oil consumer, the U.S., appears to be improving. Last month, employers hired at the fastest pace in almost a year, pushing the unemployment rate down to the lowest level since April 2009. Retailers reported surprisingly strong revenue gains in February and businesses ordered more manufactured goods from U.S. factories in January.

The Energy Department said this week that petroleum demand has grown for four straight weeks, resulting in unexpected drops in the nation's oil and gasoline supplies last week.

"The economy just seemed to be getting its mojo back," PFGBest analyst Phil Flynn said. "The question now is when will higher energy prices take that mojo away?"

Analysts say the economy can probably stay on the upswing as long as oil stays below $120 per barrel. If it goes higher and pushes up the cost of fuel, consumers could rein in spending, commuters might opt for public transportation and car pools, and leisure travelers would probably vacation closer to home.

"That's when it really starts to do damage," Flynn said.

If oil rises to $150 or more per barrel, and holds at that level for months, it could trigger another recession, economists said.

In other Nymex trading for April contracts, heating oil added 3 cents at $3.0777 per gallon and gasoline futures gained 2 cents at $3.0429 per gallon. Natural gas gained 2 cents at $3.795 per 1,000 cubic feet.

In London, Brent crude added $1.42 at $116.21 per barrel on the ICE Futures Exchange.

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Derrick Fogle March 4, 2011 | 1:19 p.m.

Is it getting warm in here, or is that my imagination?

(Report Comment)
frank christian March 4, 2011 | 2:13 p.m.

"If it goes higher and pushes up the cost of fuel, consumers could rein in spending, commuters might opt for public transportation and car pools, and leisure travelers would probably vacation closer to home.

"That's when it really starts to do damage," Flynn said.

Hmmm, Sources around here don't call that "damage". They call it required "conservation", needed to "get us off of oil" and thus save our planet.

(Report Comment)
Derrick Fogle March 4, 2011 | 3:10 p.m.

It's both. The challenge is minimizing damage while maximizing conservation.

Sure seems to be getting warm in here. Can someone open a window?

(Report Comment)
Paul Allaire March 4, 2011 | 5:46 p.m.

This is for fRANK. This deals with an earlier argument he had about the protests in Egypt being due to our success in Iraq.

Now where am I supposed to send those vagrants?

(Report Comment)
Derrick Fogle March 4, 2011 | 6:00 p.m.

Send them to work in the OIL FIELDS!

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frank christian March 4, 2011 | 6:40 p.m.

This ain't news. We've known for weeks Iraqis are upset with their gov't. Would they have demonstrated against Saddam's gov't? But for the water cannon turned on them they sound a lot like the teachers in Madison, except much more reason to be upset.

You'd have to pay, so you probably won't read Chas. Krauthammer tonight, which, is headlined,Bush Doctrine takes hold in Mideast. He asks among other things, where is the hatred of America, anywhere. Chris Mathews said there was no anti-Americanism in Egypt, but there cold be. The Libyan army officer that took control of Tobruk after gov't ousted told reporters,"we hope United States will help us". Mideast upheaval will turn out good for all in spite of Progressives. Try, somehow, to deal with it.

(Report Comment)
Paul Allaire March 4, 2011 | 7:09 p.m.

"Mideast upheaval will turn out good for all in spite of Progressives."
Say it to the shoe thrower.
"We've known for weeks Iraqis are upset with their gov't."
That is the same as the one installed by your government.
This is the central issue here. If you know that the people in Iraq are unhappy with their government it makes you disgustingly, contemptibly, and blatantly dishonest when you discuss how our installation of the government has caused others to challenge their own governments. I also notice that you are extremely quiet about the changes that have been underway in Lebanon. Are you happy with them? Do you believe that the spike in fuel costs that was caused by the unrest in Libya is part of the democrats effort to control your use of resources? Or is it another one of those "birth pangs of democracy?
And the article that I can't read... Is it this????

(Report Comment)
Paul Allaire March 4, 2011 | 7:21 p.m.

"He asks among other things, where is the hatred of America, anywhere."
Wow does he have a short memory sometimes. When convenient. I guess that since the national debt is at a record then we should eliminate the department of homeland security. I'm glad you have set this matter straight for me.

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Derrick Fogle March 4, 2011 | 8:08 p.m.

This Non-US based article talks a lot about the why of middle east unrest, with only one passing reference to the US - the leaked US cables exposing debauchery among middle east leaders. The article goes on to say, "The reality is a lot more complex."

A couple take-aways: That darned liberal idea of educating youth plays a key role in reasons for the uprisings, and much of the anger and frustration is intergenerational in nature - the youth rising up against the elders.

I suppose the silver lining is that, when all is said and done, Frank is squarely blaming Bush for the recent rise in energy prices.

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frank christian March 4, 2011 | 8:55 p.m.

Paul is as usual, near undecipherable, in his progressive rant. "makes you disgustingly, contemptibly, and blatantly dishonest when you discuss how our installation of the government has caused others to challenge their own governments." No possibility one of your intellect might finally, surmise that the great thing "Bush" etc. brought them is the ability to challenge their government without fear of loss of hands, tongues and life. Impossible is only word for your posts.

The U.S. educated protester did not thank U.S. or Bush for this decision of the Libyan young to stand up for their freedom but thanks to today,s technology they were able to see that they might partake of freedom and that tyrants can be deposed.
"demonstrators want to reclaim their dignity and the right to determine their government; they demand accountability, transparency and rule of law; and an end to corruption and respect for human rights. “We want to be free to be ourselves,” as one Libyan put it this week." Discredit Bush if you want, but that sentiment from those under the thumb of tyrants is pretty much the fourth point of the Bush Doctrine, in a nut shell.

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Derrick Fogle March 4, 2011 | 9:56 p.m.

Polls show anti-American feelings at all time high in Muslim countries:

Of course this can be completely discredited, because the polls were from 2005 and 2006, that's like a lifetime ago, and the reporting comes from one of those liberal leftist rags, the Christian Science Monitor. 10,000 Muslims from predominantly Muslim countries (Gallup), by definition, must be all wrong. One quote from one former military person who defected to the Libyan resistance, asking the US for military intervention, carries *so* much more weight.

I'd be more impressed if the collective Bush Doctrine PR machine hadn't had a, "Wait... What?!?" look on their faces when all this started happening. It seems like it took them a couple weeks to even realize that old dusty plank was even there.

And there's some tiny part of me that wonders just how a McCain/Palin presidency would have reacted to these events. Somehow, from McCain's calls for Obama to "step up the level of engagement," his FUD factor concern about the spectre of the Muslim Brotherhood, and his focus on an Egyptian military that "has, or had" very close ties to US military, for the solution, something tells me there would already have been much more "meddling" in Middle East affairs by McCain/Palin. In fact, they'd probably be dropping bombs already.

(Report Comment)
Mark Foecking March 5, 2011 | 5:13 a.m.

I think we have to see how all of this rebellion shakes out before we can make conclusions about some of these countries "thirst for democracy". For people to rise up and oust unpopular leaders is one thing, but it's another thing totally for them to install democratic governments.

In Egypt, the army is in charge right now. That typically does not portend democracy, judging from other countries in which this has happened.


(Report Comment)
Ellis Smith March 5, 2011 | 5:43 a.m.

Any student of contemporary Latin American "democracy" is aware of what happened in the latter part of the 20th Century when the military took over Argentina and Chile, respectively.

On the other hand, for 150 years the military in Colombia has steadfastly not staged coups or otherwise attempted to rule Colombia. They have followed the directives of the civilian government, but they keep carrying out their tasks in manner that creates fear and loathing on the part of the citizens.

We need to keep in mind that "democracy" doesn't mean the same thing to people of all societies. Rather than using the word we might hope that some of these countries achieve a "representative government," even if that government doesn't look the same as ours.

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David Karr March 5, 2011 | 6:37 a.m.

The major reason anti-US feelings continue to be widespread across the Arab world--whether in Egypt, Libya, or Saudi Arabia--is the Israel/Palestine issue. Arab public opinion (not unreasonably) tends to see regional events through that lens, and the Obama administration's lack of energy on the issue has turned significant opinion against him, and away from the "wait-and-see" attitude expressed early in his term.
*****So long as the US thinks it can decouple Arab public opinion from the Israel problem, Arab public opinion will trend anti-US. Most Arabs, for example, think it'd be a positive regional move if Iran did develop the bomb (Pew Research, 2010); and while most Arabs have only slight admiration for Ahmadinejad, Turkey's President Ergodan is very widely admired for standing up to Israel (and the US) over last year's Gaza relief flotilla attack, *and* through a greater willingness to engage politically and economically with Iran. Calling all this "hatred" of the US (as if purely irrational mob mentality) risks losing sight of many quiet rational reasons in the region for widespread displeasure with US foreign policy stances.

(Report Comment)
Derrick Fogle March 5, 2011 | 8:19 a.m.
This comment has been removed.
Derrick Fogle March 5, 2011 | 8:52 a.m.

Here's a fresh, unabashedly leftist ME Oil analysis:

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frank christian March 5, 2011 | 10:08 a.m.

Just thot of an "anti-yank story from 50's. While hibernating in USAF we visited Tripoli, Libya often (Wheelus AFB before Gaddafi) Once we wandered into the "old town" section of city. The Arab kids as always swarmed us for cigarettes. We all knew to shake heads and ignore them. All but a huge young man (huge, but young and naive). He didn't smoke but carried a pack and, unbelievably, pulled it out and told dozen or so kids surrounding him that they could have *One* cigarette. He finally could not handle the uproar around him and I have picture of that giant fleeing down the street from those kids. I wonder,if they had known our big friend was Jewish, would they still have wanted his cigarettes?

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Tony Robertson March 5, 2011 | 10:36 a.m.

I think we over-estimate the impact of Israeli-Palestinian issues on the Arab street. Arab dictators, and some groups who have opposed them, have used Israel as an excuse, and as a mostly phony rallying point, to either maintain power or stir up discontent.

If Israel pulled out of the 1967 territories today, many Arab leaders and groups would still be using Israel in this same manner.

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frank christian March 5, 2011 | 11:40 a.m.

Tony - Yours, above, has been my opinion and only that on the situation. Dictators use Islam to control their people and must have an enemy to hate rather than their gov't. U.S. supports Israel, thus,those governments hate U.S. not necessarily the people.

Some don't like anecdotal information, especially want to remind them of the instance of pro government thugs threatening and physically attacking western and American journalists in Egypt. Americans were given prompt medical treatment by Egyptian meds and were offered the home of one Egyptian to use as safe haven from the attackers. I know, not nearly as good as the latest "pole".

(Report Comment)
frank christian March 5, 2011 | 12:32 p.m.

pole, above, should have been poll, sorry.

(Report Comment)
Derrick Fogle March 5, 2011 | 5:52 p.m.

Speaking of "pole", how are gas prices feeling these days? Any idea what's causing the increase?

(Report Comment)
frank christian March 5, 2011 | 6:47 p.m.

I'm sure you're going to tell us.

(Report Comment)
Derrick Fogle March 5, 2011 | 6:54 p.m.

I already did.

(Report Comment)

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