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Egyptian Protests Ripple Through Oil and Ethanol

posted on February 3, 2011

Hello, I'm Mark Pearson. Despite a tepid pace of job creation last month, the U.S. unemployment rate fell to its lowest level in nearly two years.

According to the Labor Department, U.S employers added just 36,000 new positions to their payrolls in January. And as usual, some parts of the economy fared better than others.

The manufacturing sector grew by 49,000 positions in its best monthly gain in more than 12 years. But harsh winter weather cut into construction employment, which fell by 32,000, the most since May.

Overall though, 36,000 net positions in January is down 70 percent from December -- and it's about 25 percent of the number needed just to keep pace with population growth.

But the cloud looming over the labor market this week was not without a silver lining: Nationally, the unemployment rate plummeted to 9 percent. That's its lowest level since April of 2009, and when factored with December's figures U.S. unemployment fell by eight-tenths of a percentage point in its steepest two-month decline in more than 50 years.

On Wall Street, the Dow Jones Industrials rallied 30 points Friday after moving above the psychologically important 12,000 mark earlier in the week.

The equities market appears to have factored in the risks associated with more than 10 days of anti-government protests in Egypt, but the same can NOT be said about the world's most heavily traded commodity: Crude Oil...


Egyptian Protests Ripple Through Oil and Ethanol

As Egyptian social and political unrest continues to seize headlines across the globe, energy analysts are warning of a future spike in oil prices. Egypt exerts control over the Suez Canal, a major Middle Eastern trade artery for goods and most importantly crude oil. Uncertain political ramifications have sent oil prices upwards since riots began in Africa's 2nd most populous country.

As oil crested over $90 per barrel this week, the American Petroleum Institute released a report citing crude oil inventories actually rose 3.7 million barrels last week.

Despite assurances of stable oil supplies from Middle Eastern financial analysts, many American experts have struck a more negative tone. The rising tide of oil prices has caught the attention of domestic fuel proponents.

The biofuels advocacy group Growth Energy called the ongoing Egyptian unrest the latest reminder of America's "perilous addiction to oil."

Growth Energy also blasted a recent claim that biofuels has led to an increase in global wheat prices which in turn led to shortages and social upheaval in Egypt. And a recent United Nations report claims its food price index is at the highest level ever recorded.

Representing Growth Energy, Steve McNinch, CEO of Western Plains Energy, in Oakley, Kansas, blasted the tie between grain supplies and Middle Eastern riots.

McNinch said: "Any of these so-called ‘experts' who are claiming there's a short supply of grain are welcome to come out to the farm and see firsthand that there's no problem producing all the grain we need. People who are blaming ethanol for what's happening in Egypt need to check their facts. If anything, ethanol can replace oil from OPEC – and we can make more of it because of all the excess grain we have in this country."

Renewable Fuels Association President Bob Dinneen conceded one point on grain prices but urged caution in pointing blame at ethanol. Dinneen said: "Higher grain and food prices no doubt contribute to poverty levels in every country…But wild speculation and irresponsible assignment of blame, as is occurring in some corners with respect to global biofuels production, is not helpful."


Tags: biofuels Egypt ethanol Middle East news oil protests renewable fuels