Egyptians Have Hit The Streets In Massive Protest! Amid massive protest over Food, Unemployment, and a 30yr regime, the Egyptian government has banned the internet and cell phones, among other things. The protest isn’t just the economic situation but a 30 yr rule that has had only one leader in power. 3 decades is along time for 1 leader to be in power and Egyptians are fed up of the restricted rule. The rioters are wishing for President Hosni Mubarak to step down and for poverty conditions to change.
After four consecutive days of protest, Friday’s demonstrations were the worst so far and bloodiest. Mubarak reacted by imposing a curfew in the major cities, where massive clashes and stand offs are taking place. Riot control police have been responding to areas with shields, rubber bullets, batons, water cannons, tear gas and, in some cases, live ammunition. In one case I saw a video where a police armored vehicle ran over a protester and speed into a large crowd causing them to flee or be run over.
List of causes to the 2011 Riot
*food inflation
*unemployment
*lack of housing
*extended duration of a 3 decade regime rule
*desire to raise the minimum wage
*corruption
*lack of freedom of speech
*poor overall living conditions
*police brutality
*state of emergency laws
Under a “state of emergency”, the government has the right to imprison individuals for any period of time. The Egyptian government has the power to legally detain a person for virtually no reason and hold them in prison without trials for any period.
President Hosni Mubarak has ruled Egypt since 1981. Mubarak’s support for peaceful negotiations in the Israeli-Palestinian conflict and crackdown on Islamic militants made him an ally of the West but has received widespread criticism from the media over other issues such as those listed in this article.
A large percentage of Egypt’s population lives on the equivalent of $2 (in USD’s) a day.
Riots Not New In Egypt These have been the largest demonstrations seen in Egypt since the 1977 Egyptian Bread Riots. 800 people were killed in 77′, and the protests ended with the deployment of the army. Similar riots occurred in 2008 when protesters where understandably angry over food restrictions, the price of wheat, and the rationing of bread.
Riot Causes Inflationary Oil Spike The effect of the protest goes beyond Egypt as Oil prices have reacted strongly to the event. Egypt is a member is a member of the Organization of Arab Petroleum Exporting Countries. Crude rose more than 4% in Fridays trading, which is considered a large amount particularly since prior to the spike up Crude had been in a short-term downtrend. Just as it appeared commodity prices where in a strong retreat the spike sent the price per barrel to nearly $90.00.
This may seem like good news for Egypt since it deals with Oil as a global commodity but actually the high inflationary prices will hurt Egyptians that need food prices to come down. Oil is not food but everything that involves food also involves oil because most modern farmers depend on fuel to run machinery, ship their product, and the cost will even be higher to package products when fuel prices surge.
The situation is that there is less demand for crude oil since high prices are not good especially in a slow economy. People simply can not afford the price at the pump and are much more willing to cut back if they can. Long trips are out of the question for many and more people than ever are seeking alternative modes of transportation. In effect the high prices are crippling demand and some OPEC members like Saudi Arabia seem to understand this.
Is Crude’s Spike A Speculative Move? Egypt is not a major oil producer and pumps less than 700,000 barrels a day. It is possible that this spike in crude oil is a temporary one. Prior to the spike crude oil had been in a short-term down trend. Crude oil is a highly volatile commodity and prices can change rapidly. While it may be strongly down on one day it can be strongly up the next. The +4% move on, January 28th, is just one example of this.
Oil Fundamentals actually seem weak in my opinion with the latest stockpiles of oil increasing and decreased demand amid high overall global unemployment. EIA report revealed that crude inventories rose by 4.84 million barrels for the week ending January 21, 2011. Never-the-less the prospect for $100 USD oil is still in the picture if the US dollar remains weak and world events like Egypt scare the market.
