Oil hits 30-month high in trading
posted at 2:55 pm on March 4, 2011 by Ed Morrissey
In 2008, the rapid rise in gasoline prices prompted a pre-Tea Party conservative grassroots movement to “drill, baby, drill” and accelerate the use of American resources. The economic collapse popped the oil bubble as energy demand dropped significantly, and the issue faded to the background as activists focused mainly on ObamaCare and out-of-control government spending. Thanks to the wave of unrest sweeping through Arab nations, though, oil prices have once again shot up rapidly, hitting a 30-month high earlier today of $103 per barrel:
Oil prices hit a two-year high Friday after the U.S. government said the unemployment rate fell to 8.9 percent in February.
The Labor Department said the economy added 192,000 jobs last month. That suggests more people will be commuting at a time when world oil supplies are under pressure because of the crisis in Middle East.
Benchmark West Texas Intermediate crude for April delivery gained $1.27 to $103.17 per barrel in New York. The price jumped to $103.57 per barrel earlier in electronic trading, the highest since Sept. 29, 2008.
Brent crude hit an even higher price at $115 per barrel.Gasoline prices have jumped more than 10% in just three weeks, with 44 cents added to the average cost overnight, according to AAA. Thanks to these pressures, food prices have also jumped, creating inflationary pressure as the energy multiplier effect works its way through the economy.
Don’t worry about gas prices, though, because the Obama administration assures us that they can address the problem. Will they start expediting drilling permits and streamline EPA obstacles for the US to start producing more of its own energy? Not really:
Treasury Secretary Tim Geithner told lawmakers Thursday that the U.S. and other nations are prepared to tap back-up oil reserves if Libya unrest continues and severely disrupts oil supplies.
Libya is the first oil exporting nation to be engulfed in the political upheaval spreading across North Africa and the Middle East, and investors have been worried that chaos in the region will drive crude prices even higher. …
“It’s important to note that there is considerable spare oil production capacity globally, and we and other major economies possess substantial strategic reserves of oil,” he said in prepared remarks. “If necessary, those reserves could be mobilized to help mitigate the effect of a severe, sustained supply disruption.”
The Treasury secretary reassured lawmakers that underlying inflation remains low nationwide. And he said the U.S. has “considerable spare oil production capacity” it could consider tapping in the event of a “major” supply disruption.
It’s worth pointing out that had we stuck with the policy first broached by the Bush administration of opening up American exploration when the Drill Here, Drill Now movement arose in early 2008, we’d already be producing significantly more American crude than we do now. In addition, if we had started working in ANWR — a move not supported in any real sense by the Bush administration — we’d have even more of our own resources to buffer these developments in the Middle East. Switching to natural gas and exploiting the shale holdings in the interior West and eastern US would have had us on our way towards weaning ourselves from foreign energy resources altogether.
Instead, here we sit, not in the same position as 2008 but considerably worse off, thanks to the permitorium imposed by the Obama administration and the regulatory war launched on energy producers by the EPA. Geithner wants to argue that tapping the strategic reserve is a policy, when in fact it’s a short-term desperation tactic that will do next to nothing for even near-term flexibility for America’s energy needs.
We don’t need to tap. We need to drill — drill here, drill now, and drill everywhere we have reasonable chances of success. Otherwise, the American economy will continue to risk being held hostage to the fates of unsavory dictators and kleptocrats, and the regimes that eventually replace them.
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