Oil prices spike on threat of strike
Expect a temporary rise in gas prices. The price of oil has surged, partly because labor unions in Nigeria, the world's eighth largest exporter of crude, have called for a strike. Jeff Tyler reports.
Shell's Awoba plant on the Sambreiro River in the Niger Delta (Dave Clark/AFP/Getty Images)
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Scott Jagow: Oil prices retreated a bit this morning, but yesterday they spiked to nine-month highs, above $69 a barrel. One of the problems: oil workers in Nigeria calling for a strike. If this happens, you can bet we're gonna feel it at the gas pump here. Jeff Tyler reports.Jeff Tyler: The Nigerian labor unions calling for the strike want to stop the privatization of two oil refineries and reverse a hike in their gas prices.
The country's oil production is already suffering as militants have sabotaged facilities and kidnapped workers.
Nigerian crude is good for making gasoline, and a key source of supplies for U.S. refineries. Michael Lynch is with the consulting firm Strategic Energy & Economic Research.
Michael Lynch: Because the oil market is so tight right now, any kind of news like this is going to send prices up in the near term. But ultimately, the reality is that Nigerian strikes are a dime a dozen. This happens quite a bit. So there probably won't be any actual loss of oil production.
Lynch says, the Nigerian government usually works out a deal with unions to avoid a lengthy strike.
In the short term, he expects the Nigerian standoff will raise prices in the U.S. by about five cents a gallon.
I'm Jeff Tyler for Marketplace.
