Gas prices soar

Oil prices topped $100 a barrel as the turmoil in the Mideast continued, posing the latest threat to economic recovery in the U.S.

Oil prices topped $100 a barrel this week as the turmoil in the Mideast continued, posing the latest threat to fragile economic growth in the U.S. Gasoline prices spiked to a national average of $3.37 a gallon, nearly 27 cents higher than a month ago. The power struggle in Libya cut that country’s crude production by 50 percent, though Saudi Arabia, the world’s largest oil producer, stepped up production to offset some of the loss. If oil prices stay at historic highs, economists said, it could reduce the economy’s growth by about 0.3 percent, as consumers’ purchasing power takes a hit. Federal Reserve Chairman Ben Bernanke told Congress that while rising gas prices “represent a threat” to economic growth, they’re more likely to cause a temporary and modest jump in inflation.

No doubt about it—“the U.S. recovery is under threat,” said Irwin M. Stelzer in TheWeeklyStandard.com. In the past, there’s been a strong correlation between oil shocks and economic recessions. And inflationary pressures are mounting. With the government already doing everything possible to stimulate growth, policymakers have little room to maneuver if oil prices keep climbing.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up
To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us