There has been a lot of talk in the media regarding why crude oil prices will rise because of tension in Libya and elsewhere in the Middle East. The usual analysis will mention something about potential supply disruptions due to uncertainty about who is or who might be in charge, and what the future might hold for the region. The assumption is that, one way or the other, total supply is going to be curtailed, which will naturally lead to higher prices.
However, those who are reasoning in this manner have not considered the true implications of recent developments in that region. For decades, governments in the Middle East, especially those of major oil-producing nations, have been able to conspire to keep total output restricted, in order to ensure artificially high prices. There is no question that Middle Eastern countries could increase their production of crude oil, as is evidenced
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Cameron Richardson Chandra West Kasey Chambers Megan Ewing Kristanna Loken
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