Oil price spike sure to affect locals, business

Locals are worrying about how the political unrest in the Middle East – which is causing the price of oil to spike – will affect residents and businesses on the North Shore.The price of oil jumped last week, officially hitting $100 a barrel for the first time since 2008. This increase is largely due to political instability in Libya, the world?s 15th largest exporter of oil, experts say.Clay Walsh, whose father owns the Walsh Oil Company in Lynn, said he wouldn?t be surprised if prices continue to rise. With heating oil currently at the retail price of $3.60 a gallon, Walsh believes gasoline could easily go back up to $4 a gallon this summer.?The market has made some extreme moves lately,” said Walsh. “We were in a similar boat a little over a year ago, and we could definitely see that again. We should thank our lucky stars that winter is almost over.”Although the end of winter will relieve the burden of heating homes, Walsh reminds his customers that oil is needed for much more than just heat.?Everything you see has been shipped on a truck. The food you eat, the clothes you wear, everything, and the fuel you pay for at the pump is the same as what?s used to ship things,” Walsh explained. “This has the potential to push the cost of living up a lot.”That?s why Walsh predicts that both businesses and individuals will modify how they operate by car pooling and minimizing the amount of driving they do and vehicles they use.?There are tough decisions that businesses and people will have to make. My biggest concern is whether there?s anything the government could actually be doing,” Walsh said.But Mary Maguire, director of public and legislative affairs at AAA Southern New England, said it hasn?t had a tremendous impact on the market as of yet.?Over the past 11 weeks, we?ve had many weeks of one penny increases, and some weeks with no increased whatsoever,” explained Maguire. “In Massachusetts, we still stand at an average of $3.18 for regular unleaded gasoline, which is more than 50 cents higher than a year ago, but it?s still a lot cheaper than $4 a gallon.”Maguire added that AAA anticipates a more dramatic jump in gas prices, but she said it?s simply too soon to tell which direction the price of oil is headed.?There?s an unresolved political situation happening as we speak, and we don?t know how that situation will play out,” Maguire said. “With the Egyptian crisis that happened a few weeks ago, the price of oil shot up and then went back down once peace was restored. The oil industry doesn?t like uncertainty or political instability.”Likewise, Kevin Beckwith, an associate professor of economics at Salem State University, said the current rise in gas prices is more of a short-term reactive measure.?Currently, there isn?t any physical cause for the increase in price, but there?s so much uncertainty.”Beckwith pointed to Muammar Gadaffi?s recent threat to destroy Libya?s oil pipelines and facilities.?In addition to the oil not being produced due to people saying ?I?m not going to work today,? and striking, there?s the fear that oil facilities will being destroyed in war,” he said.But Maguire pointed out that it?s possible for Libya?s decrease in oil production to be offset by increased production in Saudi Arabia and Iran. These countries are vulnerable themselves, though, as the upheaval continues to threaten a number of countries in the Middle East and Northern Africa. Maguire said the security of these oil-producing nations has “tremendous implications” for the United States economy.?There?s no doubt if oil continues to increase it will be far more difficult for cash-strapped consumers to make ends meat, but it?s just way too soon,” Maguire said.