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FULLSERVICE Price Spike from the Middle East T HIS ISSUE CONTAINS THE SECOND PART OF OUR TWO-PART ARTICLE on oil prices. As noted in the first part of the article and as touched on in this one, the traditional ability of international events to trigger volatility and price spikes has certainly not gone away. Prices have just passed $100 per bbl. but President Obama’s discussion of potentially tapping the Strategic Petroleum Reserve seems to have stabilized prices for the time being. There are numerous past examples of such tradi- tional impacts on prices as the Arab oil embargo of 1973,Middle Eastern conflicts and natural disasters like hurricanes Katrina/Rita. At this point in time it’s too early to tell if the current major unrest in the Middle East is going to be comparable in impact to the 1973 oil embargo or to the lesser impacts seen with limited region- al military conflicts. As long as the disruption is limited to relative minor players like Libya the disruption should be relatively minor and the price spike rel- atively short-lived. Saudi Arabia has already indicated that it will ramp up production to make up for losses elsewhere. However, the general consensus on that is that if the situation gets worse with a major disruption in Saudi Arabia itself we could be look- ing at some variant of 1973. Experts note we are in better shape to roll with the impact of a major disruption than we were at that key transi- tion period.We have the SPR, for example. And much of the disrup- tion around the embargo can actually be linked to Nixon’s price and allocation controls. Even though the international factors behind the current price increases are traditional and fundamental in nature, the question still remains: are these natural prices? Part two of our oil prices article takes a hard look at the potential and perhaps significant role specula- tion plays in current oil prices. So even when you have a real-world incident like we have now in the Middle East, is speculation adding an extra push to the spike, or extra zing to the volatility? Unfortunately, there is likely not enough transparency in the markets today to get to the bottom of that question in a situation such as this. Keith Reid EDITOR-IN-CHIEF kreid@m2media360.com THE SOURCE FOR PETROLEUM AND CONVENIENCE MARKETERS EDITORIAL OFFICE 1030 W. Higgins, Suite 230 Park Ridge, IL 60068 EDITORIAL STAFF Editor-in-Chief Keith Reid kreid@m2media360.com (847) 720-5615 Associate Editor Debra Reschke dreschke@m2media360.com (847) 720-5618 CONTRIBUTING WRITERS Stephen Bennett Maura Keller Terry McKenna Mark Ward, Sr. PRODUCTION Art Director Andrew Stamm Production Manager Karen Kalinyak EXECUTIVE STAFF President/CEO Group Publisher Marion Minor LIST RENTAL/REPRINTS Cheryl Naughton Phone: (678) 292-6054 Fax: (360) 294-6054 cnaughton@m2media360.com ADVERTISING & SALES National Account Manager: Tom Buttrick 135 E. 55th Street, 5th Floor New York, NY 10022 (212) 588-9200, 1325 t.buttrick@jamesgelliott.com CLASSIFIED SALES Glen Datz 626 Wilshire Blvd., Ste. 500 Los Angeles, CA 90017 (213) 596-7200 gdatz@m2media360.com President/CEO Marion Minor VP Finance and Operations Gerald Winkel VP Audience Development and Collateral Services Joanne Juda-Prainito Production Director Mary Jo Tomei NPN—National Petroleum News (ISSN 0149-5267) is published nine times a year by Bev-Al Communications, Inc. 1030 W. Higgins Road, Suite 230, Park Ridge, IL 60068. ©2011 NPN—National Petroleum News. Basic subscription rates for one year to individuals in the petroleum marketing industry are: U.S. $64; Canada $74; Foreign surface mail $80; Foreign airmail $117. Single copy price: U.S. $8 (includes first class postage). Canada/Mexico/Foreign $12 (includes airmail postage). Special Issues: Buyer’s Guide: U.S. & Canada $30; Foreign $35, C-store Survey: U.S. & Canada $40; Foreign $45. All payable in U.S. currency. The publisher reserves the right to accept or reject any subscription.® Title registered in U.S. patent office. Change of address: Provide old mailing label and new address; include ZIP or postal code. Allow 6-8 weeks for change. Send correspondence regarding subscription service or orders to: NPN Magazine, PO Box 2121, Skokie, IL 60076- 7821, (847) 763-9565. Periodicals postage paid at Park Ridge, IL and additional mailing offices. Postmaster: Send address changes to National Petroleum News, PO Box 2121, Skokie, IL 60076-7821. CORPORATE OFFICE 1030 W. Higgins Road, Suite 230 Park Ridge, IL 60060 (847) 720-5600 Fax: (847) 720-5601 SUBSCRIPTION CUSTOMER SERVICE Phone: (847) 763-9565 Fax: (847) 763-9569 4 MARCH 2011 NPN Magazine www.npnweb.com