Egypt’s oil production peaked in 1996 at 922,000 barrels/day. Since then, Egypt’s oil output has declined an alarming 26%. Moreover this decline is amplified each year as the rate of depletion in existing wells accelerates. As in most middle-eastern oil exporting nations, oil accounts for the quasi totality of this country’s exports and economy (not a single Egyptian company is listed on the SP500). Egypt which used to be self-sufficient in all basic food groups back in the 1960s now imports most of its food and the state has relied on oil revenues to subsidize food prices. But as Egypt’s post-peak oil production plummets, so do food subsidies and food prices surge. Unlike the USA which can and does print more dollars sold to the Chinese to counter its trade deficit, Egypt cannot find buyers for the currency it prints and double-digit inflation is the norm. As food prices increase worldwide, this increase in price is multiplied in food importing countries like Egypt with a weak currency. But the real reason why these riots are so publicized in the West lies in the disastrous consequences they may have for the Global Oil Supply. Continue reading →