follow us:Google+FacebookLinkedInTwitterVimeoRSS Feeds

advertisement
CPBJ Blog Extras

Why Syria is important to your money

By

Back to Top Comments Print

The stock market is a tricky thing.

The ascent to a 15,000-plus Dow Jones industrial average took years of hard work, a calculated, collaborative business effort and government intervention before we could even sniff our way out of a recession.

But the all-time high industrial average in early August of 15,658 quickly fell almost 1,000 points by Wednesday despite lower unemployment rates, better housing numbers and an overall good feeling about where the domestic economy seems to be headed.

So why did the market get pummeled over the last three weeks and drop almost 200 points Tuesday before rallying Wednesday and Thursday? The answer was thousands of miles away in a country with fewer people than California or Texas. One that’s in a civil war many people in the U.S. don’t even know about.

Wait, what? Syria can do this?

We’ve got new jobs, more jobs, banks say they’re able to authorize more credit, construction seems to be picking up ... and we still have to worry about a country like Syria shooting down the stock market and impacting our stock portfolios?

Welcome to the global financial world, where we’re all tied together. When trouble befalls Syria — or more specifically, the Middle East — it’s going to have a major effect on the world economy because of that dirty three-letter word:

Oil.

Syria isn’t a major player in the world’s oil production. It hasn’t even exported oil since 2011 after international sanctions against the country went into effect, according to a very good Reuters article this week that breaks down how Syria’s civil unrest affects the rest of the world’s economy and oil supply.

What Syria does have, however, is two powerful allies — Iran and Russia — that are major players in oil exports. With both of them raising fists decrying any U.S. military strikes against Syria, that oil exportation could slow. Major oil producers Saudi Arabia and Kuwait also might take sides, slowing exports even more.

That possibility sent the cost of a barrel of crude oil shooting up — more than $110 Thursday versus under $104 earlier in the week — giving investors pause and sending the market tumbling.

Crude oil prices had gone below $90 a barrel in April for the first time since mid-2012, but have gone up more than 25 percent since then, sending domestic gas prices higher. At the start of May, according to AAA Daily Fuel Gauge Report, an average gallon of regular unleaded gas cost just under $3.50 in Pennsylvania. Now it’s up to more than $3.60.

And as we all know from living through 2008, when the gas prices go up, it affects EVERYTHING.

So yes, Syria is thousands of miles away, doesn’t produce much oil and is about one-twelfth the size of America, but we’re all connected in the global economy.

 

Michael Sadowski

Michael Sadowski

Mike Sadowski covers Lebanon County, banking and finance, law and the legal community, and technology. Have a tip or question for him? Email him at michaels@cpbj.com. Follow him on Twitter, @MikeCPBJ. Circle Michael Sadowski on .

advertisement

Comments


Be the first to comment.



Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
     View Comment Policy
advertisement
  
  
advertisement
  
  
advertisement
Back to Top