(Host) There have been some recent encouraging signs of improvement in the American economy. Yet, as commentator and veteran ABC News foreign correspondent Barrie Dunsmore tells us today, the continuing increase in gasoline prices could stymie further recovery.
(Dunsmore) Since New Year’s Day, the price of regular gasoline is up an average of forty cents to about $3.65 a gallon. There are dire predictions that it could rise to over four or even five dollars a gallon by the summer. Such high prices would ultimately stall recent improvements in the economy marked by several months of continued job creation and a decline in the national unemployment rate to 8.3 percent.
If you listen to the Republicans running for President, those in Congress, and those who advocate for them on cable news, the man wholly responsible for the spike in gasoline prices is President Barack Obama. One night this past week, I heard at least a dozen Republicans or their supporters use virtually the identical phrase… the price of gasoline has doubled since Obama took office. It’s a clever way to frame it, because technically that’s true. On Obama’s Inauguration Day in January 2009, the price of gasoline was about $1.80 a gallon. Today, it’s roughly twice that much.
But to suggest Obama is responsible for this is to conveniently forget that when Obama took office everything in the economy, including the price of oil, was in free fall. In fact, through the autumn of 2008 gasoline was at record highs of more than $4 a gallon. Then, when the market started to crash, the price of a barrel of oil plunged from more than $120 in August to less than $40 four months later. That’s why gasoline was so cheap in January 2009.
As for today, once again the price of oil seems to escape the basic laws of supply and demand. Actually, demand in this country is down significantly in the past year. And the world supply is, for now, adequate for current global demand.
But no commodity is more sensitive to political uncertainty than oil. Last year, the turmoil raised by democracy movements in oil-producing countries such as Libya pushed oil prices up. This year in the Middle East, the tensions over Iran’s nuclear ambitions are driving oil prices even further upward as speculators profit from the growing risks of war.
Under heavy pressure from the harsh consequences of new international sanctions, Iran is becoming ever more bellicose.
Meanwhile, Israel continues to threaten to bomb Iran’s nuclear facilities because it says a nuclear armed Iran would be a threat to Israel’s existence. Even many Israelis, including several of its recently retired top intelligence and military leaders, challenge that premise. Yet there is near unanimity in this country that if Israel decides to attack Iran America is morally obligated to support it.
It’s perhaps ironic that many of those same people who are blaming Obama for rising gasoline prices are so nonchalant about the prospect of going to war with Iran.
If that happens, much higher gasoline prices will be the first, but by no means the last, of a range of new global economic and political crises.