Moammar Gadhafi's time as Libya's strong man is finally about to end. So what could this mean for the United States? Well, lots of things, but some are saying that a more stabilized Libya could mean economic stimulus in the form of lower gas prices.
The nearly six-month civil war between a coalition of tribal rebels and Gadhafi's forces created such instability in world oil markets that it increased gas prices 33 cents in just two weeks. An end to the conflict in the oil-rich country is expected to bring stability to markets and, consequently, lower prices at the pump. Initial reports suggest there is something to this logic, as both oil prices fell and the stock market gained after early reports of the rebels taking control of Tripoli. This is a good sign, but by no means does it mean the road ahead will be hurdle-free for Libya.
Hurdle #1 comes in the form of getting some sort of functioning government in place once the "Gadhafi's Gone" parties are over. Hurdle #2 is getting the nation's petroleum industry running at the capacity it was before the civil war — and that isn't something that can happen overnight because pipelines and refineries have been damaged. But because the petroleum industry accounts for nearly a quarter of the nation’s GDP, whoever is in charge in the coming months and years will want to get things up and running as quickly as possible.
Could this save us from double-dip recession?
"Amidst economic volatility, lower prices at the gas pumps continue to be a silver lining for motorists," said AAA Mid-Atlantic spokesperson Ragina Averella in a report on gas prices in the United States. The timing of the war's end could also be helpful to an American economy that is desperate for some good news. "Whether motorists are looking to save on regular fill-ups or looking to squeeze in one last summer road trip during the upcoming Labor Day weekend, continued declines in crude oil prices would fuel both scenarios," added Averella.
But what does that mean beyond a family trip to a national park? David Kotok of Cumberland Advisors explains in a Business Insider column: "Roughly, a penny drop in the gas price per gallon gives Americans 1.4 billion more dollars a year to spend on things other than gasoline. That is a huge stimulant to the economy."
So we have some good news for a change. A dictator has been removed, and regular Americans might have some extra cash to stimulate the economy with a trip to a park or a drive to the beach or even a "Gadhafi's Gone" party.