There’s been a lot of worry in the global markets since the eruption of Egypt protests last week. On Friday, the Dow Jones industrial lost 166 points after enjoying a good week. According to “Unrest in Egypt Unsettles Global Markets” by Nelson D. Schwartz, the fear in the markets is much more than panic absorption. This comment from Jason S. Grumet, “president of the Bipartisan Policy center, a Washington research group” provides context by which some panic:
“A one-dollar, one-day increase in a barrel of oil takes $12 million out of the U.S. economy… If tensions in the Mideast cause oil prices to rise by $5 for even just three months, over $5 billion dollars will leave the U.S. economy. Obviously, this is not a strategy for creating new jobs”
According to the article, the Suez Canal and Sumed pipeline is used to move millions of barrels of oil in Egypt. In 2009, “2.9 million barrels of oil a day” or “2.6% of global production” passed though the country. The upheaval in the country seems to not have a solution anytime soon. Thus, the global economy must prepare for increased oil prices and the U.S. economy, which was on its way to recovery, must prepare for the impact. Throughout this week, the markets will be the first signs of the way the financial world responds.
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