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As Libya descends further into chaos and as unrest spreads throughout the Middle East, oil prices have begun to climb rapidly. Crude oil for April delivery has spiked to more than $96 a barrel in New York trading.
"In London, Brent crude for April delivery gained $1.65 to $107.43 a barrel on the ICE Futures exchange." Prospects of further increases, which will be felt at the gas pump, are almost certain. So far the fighting in Libya has taken 300,000 barrels a day offline. Further decreases, which would continue the upward trend in oil prices, are virtually certain.
A spike in oil prices, just as the summer driving season draws closer, would not be welcomed by the Obama administration as it struggles to find ways to jump start the ailing American economy before the 2012 election. A similar spike in the price of oil, in 2008, resulted in the hitherto unheard of price of $4 a gallon gasoline in most places in the U.S. California, whose strict environmental standards inflate the price of gas, is already at $4 a gallon.
The problem the Obama administration faces is partly of its own making. The White House has clamped down restrictions in the domestic petroleum, particularly in the Gulf of Mexico in the wake of the BP oil leak disaster. The energy policy of the Obama administration depends on keeping the price of fossil fuels artificially high to make its favored green energy technologies, principally wind and solar, more appealing.
Unfortunately for President Barack Obama, the wide spread use of alternate energy is years or even decades away. In the meantime, most people put gasoline in the fuel tanks of their cars. As gas prices begin to climb, cash-strapped drivers are going to look for someone to blame. President Obama's political opponents will be only too happy to provide that person.
The pattern has happened before. In the late 1970s, when the Shah of Iran fell, oil prices spiked and shortages of gasoline spread across the U.S. These shortages were caused by artificial price controls on oil and gas left over from the Nixon administration and government blundering in distributing gasoline.
There is little prospect of gasoline shortages happening again since those price controls were lifted by President Ronald Reagan. However, the price of gasoline will rise to its market level, which may be very high indeed. $5 a gallon gas is not out of the question. That portends a big problem for President Obama as he gears up for re-election.
A spike in oil prices, just as the summer driving season draws closer, would not be welcomed by the Obama administration as it struggles to find ways to jump start the ailing American economy before the 2012 election. A similar spike in the price of oil, in 2008, resulted in the hitherto unheard of price of $4 a gallon gasoline in most places in the U.S. California, whose strict environmental standards inflate the price of gas, is already at $4 a gallon.
The problem the Obama administration faces is partly of its own making. The White House has clamped down restrictions in the domestic petroleum, particularly in the Gulf of Mexico in the wake of the BP oil leak disaster. The energy policy of the Obama administration depends on keeping the price of fossil fuels artificially high to make its favored green energy technologies, principally wind and solar, more appealing.
Unfortunately for President Barack Obama, the wide spread use of alternate energy is years or even decades away. In the meantime, most people put gasoline in the fuel tanks of their cars. As gas prices begin to climb, cash-strapped drivers are going to look for someone to blame. President Obama's political opponents will be only too happy to provide that person.
The pattern has happened before. In the late 1970s, when the Shah of Iran fell, oil prices spiked and shortages of gasoline spread across the U.S. These shortages were caused by artificial price controls on oil and gas left over from the Nixon administration and government blundering in distributing gasoline.
There is little prospect of gasoline shortages happening again since those price controls were lifted by President Ronald Reagan. However, the price of gasoline will rise to its market level, which may be very high indeed. $5 a gallon gas is not out of the question. That portends a big problem for President Obama as he gears up for re-election.
Note: This article was written by a Yahoo! contributor. Join the Yahoo! Contributor Network to start publishing your own articles.
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