The Arab awakening, the Japanese tsunami, the EU's continuing economic crises, rising temperatures, drought, floods, and another major surge in oil prices have combined to darken the outlook for the months ahead. Political stagnation continues in Washington, where nearly everybody knows we have a problem, but few have yet comprehended just what kind of a problem, much less what are sensible solutions.
As we enter July, the insurrection in Libya which removed 1.3 million barrels a day (b/d) of oil from the export markets is still going on. As a cartel, OPEC is refusing to make up for this loss, but the Saudis and their Gulf friends say they are stepping up production over the next few months to make up for the loss of Libyan crude and increasing demand. Oil prices which are currently around $95 a barrel in NY and $114 in London are down about $15 dollars a barrel from their highs in April, but are substantially above where they were last year.
What is forgotten in all this is that during the great 2008 oil price spike prices ran up quickly in the first half of the year and then collapsed by over $100 a barrel in the summer, thereby saving the global economy from much worse than it would have been had prices stayed higher. US average gasoline and diesel prices are still running about a dollar a gallon above where they have been for the last few years, creating a great strain on the U.S. and global economy. Keep in mind that comes out to about $540 million additional dollars U.S. consumers must pay out each day to keep our transportation running at the same pace it did last year. It doesn't take much to figure out just where that $540 million is coming from. Full Article >>>