Mideast Problems Could Affect Pump Prices Reporter: Don Wall Updated: Oct 12 at 05:37PM

DALLAS  Bad news from the Middle East sent shock waves though the U.S. Stocks plunged to year lows, while oil prices jumped to near decade highs.

U.S. crude oil hit $37 a barrel. Local energy experts say that will hit consumers in the pocketbook.

Violence in the Mideast could threaten the flow of oil to the rest of the world, and that would have a dramatic impact on the American economy.

"The price of oil has gone up 10 percent in the last hour," said Allen Mesch, SMU energy analyst.

Allen Mesch directs the Maguire Energy Institute at the Cox school of business, at SMU.

"I think we could see oil prices on the spot market at $50, it wouldn't surprise me, starting at $35. We could see that in a week, if things keep heating up," said Mesch.

The impact would be dramatically higher gas prices. Higher travel costs. And higher prices for consumer goods, because of higher transportation costs.

"When you see these higher prices, they are certainly going to be inflationary. There could be curtailments, which means that businesses could be shut down, or industries could be shut down and that hurts the economy," warns Mesch.

Mesch sees the possibility of gas lines, like we saw in 1973 during the Arab oil embargo.

"You certainly would expect a strong military response to anything that would disrupt oil supplies, not just from the U.S. but by some kind of combined force, much like we had in desert storm," said Mesch.

So, while the U.S. military assesses the possible need to use force to protect oil, American citizens are urged to prepare for a cold winter.

"If I'm in the Northeast today, I'm going out and buying more insulation to put in my attic, buy some firewood, and buy a couple of extra sweaters," said Mesch.

An oil shortage could also mean that the U.S. may have to share oil with other nations, based on an existing agreement. With winter approaching, and the need for home heating oil, the timing couldn't be worse.

http://www.wfaa.com/wfaa/articledisplay/0,1002,1_1_1_14976,00.html

-- Martin Thompson (mthom1927@aol.com), October 12, 2000

Answers

Agreed. $50 oil looks like a very real possibility now.

-- Loner (loner@bigfoot.com), October 12, 2000.