The Effects of 4 Dollar Gas

Yemen, Bahrain, Libya, Iran, Kuwait, Jordon, and possibly even the citizens of Saudi Arabia will potentially follow in the footsteps of the protests in Tunisia and Egypt. Kuwait youth groups took to the streets this week to demand more freedom and the removal of Prime Minister Sheikh Nasser al-Mohammad al-Sabah. Just to give you an idea of what the Kuwaitis are up against, the Sabah family has ruled Kuwait for 250 years. The prime minister is the nephew of the ruler of Kuwait and FutureMoneyTrends.com does not believe we will see a severe uprising like we did in Egypt, however with Kuwaitis protesting, it may add to the momentum of others in the region who are willing to demand a complete regime change in their own nations. Arabs across the region are seeing daily protest from neighboring countries, regime change in Tunisia, Egypt, and a civil war in Libya. Libyan forces loyal to Gadhafi used helicopter gunships, rockets, and gunfire against the opposition this past weekend. Rebel forces continue to slowly advance, however, Gadhafi controls the air which gives him a huge advantage. Right now as we write this we are getting reports from Reuters and Al Jazeera that plumes of smoke are rising from the area around the as-Sider oil terminal in east Libya. If this is Gadhafi fulfilling his promise to go down with a bang, this could become a significant story and add an upward pressure to the price of oil. Currently, markets are also bracing for Saudi protests that are supposed to begin on March 11th. The Saudi government has already warned of severe action against protests, in fact, prince al-Faisal said he would "cut off any finger raised against the regime." We should note that the protesters will mainly be the minority Shiite population, activists have called for a 'Day of Rage" this Friday

Gasoline prices have soared in recent weeks along with oil prices. Many Americans are already paying $4 per gallon and with the middle east still on fire, we could easily see $5 gas prices by the summer. Last night one of our staff members filled up in Southern California for $3.95 and ended up spending $75 to fill up. When you consider that this person has to fill up at least once a week, you are talking about an extra $100 a month in gasoline expenses compared to just a few weeks ago. This is going to hit all Americans, many who are already living on the edge. Right now the U.S. has roughly 43 million people on food stamps and out of the adults in this group, over 40% of them have jobs. Higher fuel prices will cause higher food prices, more layoffs since consumers will have less to spend on other expenses, and more debt. Hopefully $5 dollar gas will be the top, but with QE policies and revolutions there are no guarantees. Of course, we are sure D.C. will play the blame game, since they have only had a 40 year warning about an oil dependency problem.

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