Wednesday, May 30, 2012

Greece and the gas pump

The future price of a gallon of gas might just have a starting point in Athens.  The Financial Times highlighted this yesterday with an article, Need for funds is at its greatest.

"At the same time, the eurozone crisis is compounding concerns about the ability of Gulf petrostates and corporations to gain access to financing, as European banks pull back from the Middle East and north Africa.

The result, according to Moody's, the credit rating agency, is likely to be a "sustained reduction of lending" at a time when the Gulf Co-operation Council faces an estimated $1.8 trillion of capital investment over the next 15 years."

The perfect storm for much higher gasoline prices; increased global demand from the middle class of the developing world, at the same time you have a reduced supply of debt financing.  Asian financial institutions might be an alternative - - if not, Arab oil producing countries might be seeing the best and worst of times.  

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