The last time the United States saw their oil prices soar, really soar, was during the three month Arab oil embargo in the early 1970s. Prices hit nearly $12 a gallon and Americans sat in line for hours just to fill their cars. It was then that Jimmy Carter started the initiative that put solar panels on the White House roof (Reagan took the panels down but Obama plans to put them back with encouragement from 350.org). A few decades later, as Libyan protesters suffer against Gaddafi’s heavy-handed reproach, and it seems momentum could unravel the entire region, Americans are nervously watching their wallets again.
USA Today reports that since the turbulence ignited in the Middle East oil prices rose 6% to $95.39 per barrel.
If unrest moves into other oil-producing countries such as Saudi Arabia or the United Arab Emirates, it is not inconceivable that pump prices could go as high as $5 a gallon, according to Darin Newsom, senior analyst for energy tracker DTN.
While this is peanuts for the people in Oslo and other European cities where fuel prices are not artificially low, Americans are said to shut down their consumption habits when prices get too high. This in turn can impact on the country’s consumer-driven economy.
The paper quotes Moody’s Economy.com economist Ryan Sweet: “Above $4 a gallon, we’ll see consumers hunker down,” he said. “It could take steam out of spending just as consumers were getting their sea legs.”
AAA spokesman Troy Green cautions against trying to make predictions, while Tom Kloza, chief analyst with oil Price Information service notes that current prices – despite being 20% higher on average than last week – are still 23% lower than the 2008 highs.
Other forces are also adding to escalating prices – including increasing demand in China and elsewhere.
Last year we noted how the fires in Russia translated to higher wheat prices in Egypt, a strong indication of the interconnectedness of our lives. Those soaring prices were just one of many reasons for the Egyptian riots, and should have been an early warning signal.
Now the riots threaten to destabilize oil prices, but that won’t be the worst that comes out of this phenomenon, since hundreds of Libyans have already died defending their right to a better life. On the other hand, if Americans have to face high prices, that could create incentive to develop more sustainable, long-term solutions.
On the other hand, it could also create more demand (from the right-wing) to tap oil in sacred places like the Arctic National Wildlife Refuge (ANWR).
:: USA Today
More on Middle East unrest:
image via Mykl Roventine