Prophecy in Egypt and Fear Mongering Worldwide

The Suez Canal is one of the engineering marvels of the modern world. It cuts through 118 miles of Egyptian countryside, connecting the Red Sea with the Mediterranean, thus linking Europe with East Africa and Asia. Initially completed over 140 years ago—after 1.5 million laborers moved more than 1.2 billion cubic feet of soil with picks and shovels—to this day it remains a conduit for roughly 8 percent of global seaborne trade.

Of particular concern is oil. Though Egypt exports none itself, the U.S. Energy Department still classifies it as one of the few World Oil Transit Chokepoints. Every day, 3 million barrels of oil and fuel products pass through the canal and the Suez-Mediterranean Pipeline, which also traverses Egypt. That amounts to 2.5 percent of global oil production.  About two thirds of that energy is traveling north toward Europe. It accounts for 5 to 7 percent of Europe’s oil consumption.  Disrupt these shipments, and European supply—and global prices—would be “affected tremendously,” Dalton Garis, an associate professor at an Abu Dhabi energy-research center, told the Wall Street Journal.

“This is where the financial report becomes blurred, as the numbers just don’t seem to add up. With the canal ONLY supplying 2.5% of global production, how would it cause a rise of more than 2.5%?” Asked California citizen Peter Husser. “Isn’t that just another case of old school fear mongering to justify a raise in price for goods and services? Im sure Wall Street and those who stand to profit don’t mind, but what of the other 90% of the world?”

The New York Times reported on the same possibility: “While [oil] prices are set globally, the immediate impact of any interruption would be felt primarily in Europe, which relies heavily on jet fuel, heating oil and other distillates refined in the Middle East and shipped via the canal and pipeline” (emphasis mine). Already this past week, European oil prices have soared—even higher than those in America without anything actually happening yet. Investors are concerned that Egypt’s instability makes ships passing through the canal more susceptible to attack. Worse though, is the prospect of… Read More