Fighting between South Sudan and its rival, Sudan, could restart a 20-year civil war that claimed the lives of millions. It could also affect the price Americans pay for car fuel, China’s ability to keep its economy growing, and the stability of the region. Here’s a few reasons to pay attention to the fighting in Sudan.
Fuel prices have remained in the range of $100 per barrel for more than a year because of “headline risks” such as the Arab Spring movement, and more recently with growing tensions between the West and Iran over its nuclear program.
South Sudan and its rival, Sudan, have ratcheted up their dispute over how to share oil revenues, as South Sudan shut down its oil production. Currently, the landlocked south must transport its oil to markets by pumping it through oil pipelines that go through the north, and the north is demanding high pumping fees for this service. In a brazen attack last week, South Sudan seized Heglig oil field, shutting off half of Sudan’s remaining production, before withdrawing over the weekend.
For American consumers, instability in oil-producing countries is being felt at the pump, with pump prices 34 cents higher in the first quarter of 2012 than they were at this time last year. Any further shock – from piracy in the Indian Ocean, to Niger Delta militant attacks, to the current fighting in the two Sudans – could push those prices higher.
“I don't know if $4 a gallon is the tipping point, but I do know that [US] consumers are taking evasive action," energy analyst Tim Evans at Citi Futures in New York told Reuters news agency. “The higher prices go, the more heat politicians feel."
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