UK Independent Oil Companies Remain Strong Amid Rising Gas Prices

Steven Bobson, Europe & Americas Editor
February 22, 2011 /

The US and UK have been witnessing for weeks the constantly rising gas prices fueled by political unrest in the Middle East beginning Egypt’s protests to oust President Mubarak up to the current turmoil in Libya that increasingly gathers steam.

Nevertheless, Deloitte’s second full year ranking of UK upstream independent oil companies based on market capitalisation shows a steady strength in the sector. Deloitte said UK independent oil companies “significantly out-performed the oil majors, the market and the oil price over last 10 years.”

Market capitalisation of the 25 biggest companies in the sector rose 28 percent, from £25.3 billion to £32.2 billion.

“Overall, 2010 was a year of recovery for the UK upstream independent oil and gas sector, with rising oil prices and greater access to capital improving investor sentiment in the sector,” said Ian Sperling-Tyler, associate partner of energy transaction services at Deloitte.

Hard on the heels of optimism brought about to investors by the resignation of Mubarak on February 11 that had restored the US and UK stock exchanges to their normal levels, consumers are, however, threatened again by another political turmoil in the Middle East that already started to reflect its impact on gas prices.

The rise in gas prices that continuously gains momentum across USA is not likely to wane down soon as Libyan leader Moammar Gadhafi expressed his resolve not to hold out of power despite public uprisings in Benghazi up to Tripoli.

Gas prices per gallon saw dramatic changes across US and UK. From last week’s $3.14 per gallon, the US weekly average price per gallon rose to $3.19, 54 cents higher than the past year and the highest since 1990 that has been posted in the month of February.

New England and California posted the highest gas prices, $3.23 and $3.56, respectively. Meanwhile, New York oil trading closed at $93.57, the biggest rise in just a day for three years.

Gas prices in the rest of USA are just as quick in reacting to Middle East’s turmoil. The AAA’s Fuel Gauge Report recorded a 6 cents increase from the past week to $3.20 of regular gasoline in Charlotte while North Carolina is slightly lower at $3.14 on its national average.

But gas prices in Miami have been the highest so far, posted at an average $3.21 by the AAA.

Although most of the crude oil are exported to Europe, USA imports 40 percent of its own from the region which it then refines, the distillates of which are then sold back to Europe, which also include gasoline and diesel.

Andrew Lipow, president of Lipow Oil Associates in Houston, said as quoted by the ABC News that what the oil market is more concerned about is the widening spread of unrest across the Middle East, from Egypt, Morocco, Algeria, Tunis, to Libya.

He raises fears that the unrest may reach Saudi Arabia which supplies 9 percent of the world’s crude consumption and 11 percent in the US.

Lipow is more worried over gas prices being driven up more drastically if Saudi was stricken by similar political activism.

 

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