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Oil Prices: As serious as our debt is, we face a far bigger near-term threat from surging oil prices that threaten to ignite inflation and slow economies around the world. So why aren't we doing anything about it?
Almost all energy crises are caused by humans, not nature, and the one we're experiencing now is no different. Oil prices are running up as turmoil mounts in the Mideast. But they're also on the rise because one nation that has plentiful resources — the United States — refuses to develop them.
What's strange is how blase policymakers and the White House seem to be about it — even the chairman of the Federal Reserve.
Testifying to Congress on Tuesday, Ben Bernanke shrugged off the threat of inflation. Yet, perhaps to cover his bets, he also warned of the economic damage from "sustained rises in the prices of oil or other commodities."
Well, guess what? Oil prices have been rising steadily for two years. If this new, most recent spike lingers a few more months, the world economy will be in trouble and the U.S. could face a double-dip recession that throws millions out of work and decimates energy-reliant industries.
Just how severe is it? A $10 hike in oil prices siphons about $150 billion from the economy, say analysts. An old rule of thumb says that a long-term hike of $10 in the cost of energy is equivalent to a 0.5% cut in gross domestic product.
Since bottoming at just over $33 a barrel on Feb. 12, 2009, crude has tripled to $99.63. And if the futures market is any guide — and it usually is — spot prices of $120 a barrel may not be far off.
As the chart below shows, such increases in oil prices have always resulted in a recession.
These basic financial facts are made gloomier still by the situation in the Middle East. The region is the source for a major share of the world's crude, and with multiple uprisings and outright revolts taking place in oil-rich countries from Libya to Iran, future oil supplies to a thirsty global market can't be assured.
Once again, this is ample reason for the White House to promptly end its foolish war against fossil fuels and recognize the hard reality of our economy's existence.
Our nation's wealth depends on oil. The Energy Department's own estimates say we'll depend on oil for national energy needs at least through the end of this century — a hard fact that cannot be wished away.
Believe it or not, the United States is awash in oil. At last estimate, we had some 2 trillion barrels underground and offshore — enough to supply our needs for decades to come. We also have hundreds of trillions of cubic feet of natural gas. All we have to do is get it.
Despite this, the federal government has imposed a moratorium on offshore drilling and severe environmental limits on tapping the ocean of oil that exists in shale deposits. It is also heavily subsidizing so-called alternative fuels that cost more than oil to produce.
This is sheer madness — the kind of economics that might be practiced in Alice's Wonderland, but not in a responsible free-market democracy.
Government Waste: While the Democrats grouse about a mere $61 billion spending cut, duplicative services at the federal level may account for $200 billion in needless spending. Here's a chance for bipartisan lawmaking. A probe by the Government Accountability Office found, hopefully to no ...
Foreign Policy: President Obama has picked, tourist-like, three random countries for his first showy trip to South America. By contrast, Rep. Michele Bachmann, who just got back, demonstrated what a serious policy visit is. These days it seems like all of Washington wants to visit Latin ...
Media Bias: Libya's aflame, Mexico's under siege, Iran's building nuclear weapons and what's the U.N. secretary-general doing? Pitching movie ideas to Hollywood bigwigs. We kid you not. As the real world seemed to be coming apart at the seams, Ban Ki-moon swept into Tinseltown during Oscar ...
Power: A study of renewable energy in Scotland shows that for every job created in the alternative energy sector, almost four jobs are lost in the rest of the economy. We've seen this movie before. Not only has the sun set on the British Empire, but the promise of wind apparently is ...
For all their bluster about making Barack Obama a one-term president, Republicans are assembling what looks like a remarkably weak field of candidates for the 2012 election — an odd assortment of the uninspiring and the unelectable. In part, this reflects a healthy respect for Obama's ...
Posted By: palmaccior(350) on 3/2/2011 | 4:32 AM ET
With a Whitehouse full of fools, can we really expect an end to the foolish policy on domestic natural resource development?
Posted By: Sgt.Stryker(55) on 3/2/2011 | 4:03 AM ET
Unfortunately, we quit being a "responsible free-market democracy" about 2 years ago, so the statist agenda is being pursued no matter the cost. Remember, Barry said our energy costs would "necessarily skyrocket" due to his policies. He wasn't waxing hyperbolic. He is intent on bankrupting the US in order to show the world that capitalism has failed. Buckle up folks, got a long, bumpy ride ahead.
Posted By: getplaning(1040) on 3/2/2011 | 12:07 AM ET
Add Bernanke's name to the growing list of professionals who say the Republican economic agenda will slow economic growth and cost jobs. I haven't seen one report anywhere that says the GOP agenda is good for the economy. The more pessimistic projections on the Republican plan show slower economic growth and job losses. The more optimistic projections on the Republican plan also show slower economic growth and job losses. Maybe that IS their agenda.
Posted By: zenga(1935) on 3/1/2011 | 9:41 PM ET
the whole obama administration is full of morons. top down, complete demwits. 2012 seems further away every day.
Posted By: carl2003(45) on 3/1/2011 | 9:32 PM ET
Didn't Obama once claim that we could save all of the oil we needed to save by inflating our automobile tires with Nitrogen instead of air?
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