Mid-day Update

Ukraine, Iraq and the price of oil

David Brancaccio Jun 16, 2014
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Mid-day Update

Ukraine, Iraq and the price of oil

David Brancaccio Jun 16, 2014
HTML EMBED:
COPY

After talks about Ukraine paying its gas bills broke down, Russia began lowering the supply of natural gas flowing to Ukraine on Monday. The Russian state-owned gas company Gazprom said it’s open to more negotiations but that it now wants Ukraine to pay up front for this crucial energy.

Western Europe also gets gas from pipes that flow through Ukraine and Gazprom’s CEO said this morning that he see’s what he called “not insignificant” risk for gas heading for the European Union. Remove the double-negative and what you get is a “significant risk” for Europe’s supply.

Add to those risks the concern over oil exports from Iraq, and analysts have started to worry about high gas prices impacting economic growth in the U.S. 

“I ask myself, ‘What gasoline price would actually start to cause problems for the U.S. economy?’ and the number that came out is quite high. About $5.15 per gallon or $5.25 per gallon,” says Carl Riccadona, senior U.S. economist at Deustche Bank Securities. “That would be the level, if sustained, that would cause growth to break down.”

Plus, Starbucks announced a new perk on Monday called the Starbucks College Achievement Plan. It’s partnering with Arizona State University to pay for its workers to do online college classes. 

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