Audio Transcript:

Lisa Mullins: Libya is unlike Egypt, Tunisia, Bahrain, and Yemen in at least one important respect. Libya is a member of the Organization of the Petroleum Exporting Countries and so the violence in Libya is raising international alarm. Oil prices jumped today, to their highest level since the global financial crisis back in 2008. The price shot up $3 to $89.50 a barrel. Steve Levine is a writer/contributing editor with Foreign Policy magazine who specializes in the oil industry. There's that saying that markets hate uncertainty, so does it follow, Steve, that these increase are likely to go on for some time?

Steve Levine: The whole middle east upheaval that we've seen has caught everyone by surprise. We can't say for sure that the rise in oil prices that the volatility will go on. Are we talking weeks? Months? But we know that it's here now and there is going to be a straight line between the increase that we saw today, a considerable spike. We are going to see that at the gasoline pump in the next week or two I would think.

Mullins: What is the trajectory though that the oil follows? From unrest in a place like Libya to the gas pump in suburban United States.

Levine: You start with these oil traders. They see uncertainty. Libya products 1.6 million barrels a day and it doesn't matter that that oil never reaches the United States. The price of oil everywhere in the world rises at the same time. That oil is delivered to refineries, mostly in Texas and Louisiana. Those refineries are paying that higher price so when they produce gasoline and other products in their refineries and they sell those to those huge tanker trucks that you see going down the highway that deliver gasoline to your neighborhood gasoline station, they charge a lot more for that gasoline. That's when we see the prices go up at the pump.

Mullins: Steve Levine, we're hearing reports today, as I'm sure you are, that several enormous oil companies are pulling out non-emergency staff from Libya. Does that have longer term implications for the supply of oil?

Levine: It only has even short term implications for the supply of oil if the unrest affects what's going on in the oil fields. This is a precautionary measure. There is no indication right now that the oil supply out of Libya is affected. There's only the concern that it could be affected.

Mullins: Libya is a major, as you said, oil market, the biggest oil market in Africa. Where else is the industry and industry analysts, where are they all looking now?

Levine: All eyes are on Saudi Arabia. Saudi Arabia is the linchpin of the global oil market. It produces ten percent of the global oil supply. It has by far the majority of the excess capacity. Most of the oil is located in the eastern part of the country, province. It is connected by a causeway to Bahrain. It has a Shiite majority. There is a Sunni minority. The Sauld family, which runs the country, the same thing is in Bahrain so there is the danger that the Shii upheaval in Bahrain will wash over into the eastern province. If that happens, you are going to see the spike that we saw today go through the roof.

Mullins: Thank you very much. Steve Levine, contributing editor with Foreign Policy magazine. He also writes a blog for Foreign Policy. It's call The Oil and The Glory. We'll make a link on our website, theworld.org. Thank you Steven.

Levine: Thank you, Lisa.