NEW YORK ? One of the biggest suppliers of oil to the United States may shut off the spigot this weekend, pushing crude and gasoline prices higher for Americans.
Nigeria, which supplies 8 percent of U.S. oil imports, could see production halted if striking workers walk off the job Sunday. Workers are demanding the return of a vital government fuel subsidy that has kept gasoline prices low in that impoverished and restive nation of 160 million people.
It's unclear how much of Nigeria's production would be affected. At worst, the country's 20,000 unionized oil workers could take as much as 2.4 million barrels of daily crude production off the market, striking at the heart of Nigeria's oil-dependent economy.
Even if strikers are only partially successful, fears of tightened global supplies could raise oil prices by $5-$10 per barrel on futures markets next week. Gasoline prices would follow, rising by as much as 10 cents per gallon and forcing U.S. drivers to spend an additional $36 million a day at the pump.
Gasoline now costs $3.39 per gallon (89 cents a liter) after rising 11 cents since the start of the year. Experts predict the national average could rise as high as $4.25 per gallon ($1.12 a liter) in 2012.
The Nigerian government already has offered a smaller, temporary fuel subsidy and will meet with union leaders on Saturday. The strike could be called off but protesters have promised to halt production if they don't get the full, $8 billion subsidy restored.
Disruptions would have a long-term impact on Nigeria's economy. Union president Babatunde Ogun said it could take six months to a year to restart oil fields once they're shut down.
"If everything comes to a standstill, the government will budge," Ogun told reporters this week in Lagos.
The threat to shut off oil production is the latest move by protesters after a week of violent, anti-government clashes throughout the country. The strike began Monday to challenge President Goodluck Jonathan's decision to abandon the fuel subsidy.
"It's going to be a showdown this weekend," in Nigeria, Oppenheimer & Co. analyst Fadel Gheit said. "You can only hope that cooler heads will prevail."
It's hard to predict how effective a national oil worker strike would be.
Oil production facilities are usually automated, allowing them to pump oil out of the ground without anyone at the platform. But if something breaks, if the pressure in the well fluctuates, or if other problems occur that cause an automatic system shutdown, there wouldn't be anyone there to get production running again.
It's likely oil companies operating in the region _Royal Dutch Shell, Exxon Mobil Corp., Chevron Corp., Total SA and Eni S.P.A. ? would simply shutter their platforms and wait for political tensions to subside, Gheit said. Oil companies could still export oil from storage terminals on the coast; that is, if union workers at the terminals stay on the job.
The price of oil already has swung up and down this year because of supply concerns in another oil-rich part of the world, the Persian Gulf. Iran, the world's third-largest crude exporter, is sparring with the U.S. and Europe over its nuclear program.
While Iranian imports are banned in the U.S. because of long-standing tensions, the country supplies 2.2 million barrels per day to the rest of the world, including Europe. Meanwhile, Libya is quickly restarting oil fields that were shut down during the anti-government uprising last year. It has about 1 million barrels per day back online, and it expects to increase production to pre-rebellion levels of 1.6 million barrels per day by mid-year.
Oil prices fell by $2.86 this week to end at $98.70 per barrel in New York. Prices dropped as Europe delayed a decision to ban Iranian imports. But they could snap back up given the variety of geopolitical problems affecting world supplies, including the threat of a Nigerian oil worker strike.
The U.S. government expects the price of oil to average $100.25 per barrel this year.
Michael Lynch, president of Strategic Energy & Economic Research, said oil could jump by $5-$10 per barrel if the strike begins Sunday. Nigeria ranks behind Canada, Saudi Arabia, Mexico and Venezuela in oil exports to the U.S. It produces a valuable crude variety that is easier and cheaper to turn into gasoline than others.
Investors, who have been numbed from years of political unrest in Nigeria that included sabotage, thievery, environmental protests and other operating problems, may wait to see how the government works with the union. Nigerian oil always seems to be under a perpetual threat of some kind, Lynch said.
"Though this time seems more serious," he said.
Nigerians have been upset for years as international oil production damaged the environment with little apparent domestic benefits. One of the only visible perks was the fuel subsidy. Removing it forced gasoline prices to jump overnight from $1.70 per gallon to at least $3.50 per gallon ? a crippling increase for a nation where most people live on less than $2 a day.
The government still seems determined to have its way, Barclays analyst Helima Croft said, but an oil field strike would be a game changer. If workers can shut down oil production, it's only a matter of time before declining oil revenues will force the government to cave, she said.
"Any disruptions in either oil production or exports would severely constrain government activities and its ability to meet its obligations," Croft said.
Eighty percent of the country's revenue comes from oil.
___
Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAP
____
Associated Press writer Jon Gambrell in Lagos, Nigeria, contributed to this report.
il postino il postino online black friday deals nfl scores nfl scores college football scores arkansas razorbacks
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.