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.
What this country needs is even higher gas prices, said Thomas L. Friedman in The New York Times. Our addiction to Mideast oil has led us to treat that entire region like a giant gas station, tying us to tyrannical governments. So let’s impose a $1-a-gallon gas tax, phased in at 5 cents a month starting in 2012, with the money going to pay down the deficit. People will stop buying gas guzzlers, and our Mideast policy can become sane. “Yes, it will mean higher gas prices, but prices are going up anyway, folks.”
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In the immediate future, America will continue to depend on oil “for jobs, commerce, and our very existence,” said Deroy Murdock in National Review Online. The Mideast turmoil should convince President Obama that federal lands and offshore waters now closed to oil and gas exploration should be opened as soon as possible. But “Uncle Barack’’ continues to keep those resources under lock and key. “May we drill now, please?”
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