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Energy Indigestion gives Consumers Gas Pains
Nations of the world fuel prices
Netherlands Amsterdam $6.48
Norway Oslo $6.27
Italy Milan $5.96
Denmark Copenhagen $5.93
Belgium Brussels $5.91
Saudi Arabia Riyadh $0.91
Kuwait Kuwait City $0.78
Egypt Cairo $0.65
Nigeria Lagos $0.38
Venezuela Caracas $0.12
The Nation’s chief executives went on the campaign trail yesterday in their bid for re-election in November. The primary objective was to frame the message pertaining to the enduring and encompassing issue of Energy. A recent dip in the President’s favorability ratings and domestic job approval coincides with the recent spike in gas prices.
President Obama and Vice President Biden went on the attack in an attempt to discredit the recent criticism from the Republican Presidential Candidates. The message focused on the nation’s Oil output being at an all time high yet being insufficient due to ‘Market Forces.’ This evolved into reinforcing the plan for a comprehensive approach toward an all inclusive strategy regarding the nation’s energy needs.
Although it has become an annual ritual, American consumers still experience indigestion when gas prices rise. As the economy flirts with recovery, a prolonged and steady rise in gas prices could set the nation back into recession. Polling data indicates a majority of American’s believe prices at the pump are within the realm of the Presidents control.
That particular false premise was actually given credibility yesterday. Upon the rumor, President Obama and UK Prime Minister David Cameron had colluded to release 10% of their Strategic Petroleum Reserves, the NYMEX Oil Futures Market noticeably sold off. When the rumor was dispelled, the market regained nearly all of its losses.
It is widely held, Speculators account for approximately 56 cents for every gallon of gas at the pump. The once simple Supply and Demand equation for commodities has taken on worldly complexities. Unrest in the Middle East, in fact throughout the world, can change the current oil surplus to a shortfall overnight.
The fact remains when the price of a barrel of oil increases, everything consumers buy, costs more. The effects are far reaching, especially in the grocery store. Rising energy prices increase production, transportation, and retailing costs, which in turn get passed down onto the consumer. This curtails consumer spending in other areas of the economy due to the strain on an individual’s disposable income.
The cost of a gallon of gas may be the single most determinate factor when the electorate is in the voting booth. It’s the culmination of decades of failed Energy Policy; we as a nation tend to ignore, until that time of the year when gas prices spike.
The all time high price for a Barrel of Oil peaked in July of 2008 at $147.30. The price for a barrel of oil closed yesterday at $105.11, which currently equates to $4 per gallon.