Gaddafi Threatens to Torch Libya's Oil
Yikes… Oil is up again this morning. West Texas Intermediate has blasted up to $96.78. (Barely a week ago, it was $85.) Brent is up to $109.02.
According to Reuters, Libyan oil production is already down to three-quarters of normal. And that could soon plunge to zero… If it’s true that a desperate Col. Gaddafi is looking to torch the pipelines leading from his country’s oil fields to Mediterranean ports.
“Gaddafi has ordered security services to start sabotaging oil facilities,” a source close to the regime tells Time intelligence columnist (and former CIA case officer) Robert Baer. “The sabotage, according to the insider, is meant to serve as a message to Libya’s rebellious tribes: It’s either me or chaos.”
“Seriously,” muses our own Byron King, “I wonder if any of Gaddafi’s goons will pull the trigger. Maybe… Saddam Hussein and Desert Storm sort of speaks for itself.”
Just in case you need a reminder of what happened 20 years ago this month…
Scorched earth: US jets fly over the Kuwaiti oil wells torched by Saddam Hussein, 1991
As Iraqi forces retreated from Kuwait in 1991, Saddam Hussein ordered his troops to set fire to some 700 oil wells. Nine months passed before the last fire was put out.
Baer says if Gaddafi can’t get the tribes back in line, he’ll turn Libya into a Somalia…with oil. To start that process, he just released some Islamic militant prisoners to stir things up.
It may be just a bluff. Then again, Gaddafi’s own interior minister just joined the opposition. Desperate men do desperate things. We’ll be watching.
“Oil prices could go up substantially even from these levels,” says Vancouver favorite Marc Faber. “I don’t think that oil is expensive compared to other commodities or compared to other goods prices in the world.”
And if that doesn’t make sense to you, we’ll share this chart with you one more time:
“Further gains would, obviously, depend on some political problems,” Faber continues – for instance, “some interruptions in oil supplies.”
“Things are (finally) starting to come unglued in the Middle East,” says Byron King, writing today from his old stomping grounds in the Texas oil patch. “Are you surprised? Much of this discord – great and small – has been festering for a long time.
“And also, for a long time, a lot of forces have been working for the pots NOT to boil over. We’ve seen a lot of big power accommodation toward crummy governments, run by thieves and despots, if not zealots and ideologues, if not just plain mentally ill sociopaths.
“Even the much-vaunted ‘resource nationalism’ of recent years is, at root, ‘resource larceny’ by the top dogs. Look at Libya, with 7 million people and $50 billion in nationalized oil money per year. That translates to something over $7,000 per person, yet the place is impoverished. Where did all the money go?
“At any rate, you need to understand that the post-World War II era – which was, in many respects, so favorable to the US – is just plain falling apart before our eyes. It worked until it stopped working. Now? I think it’s broken pretty bad.”