Tags: Schork | Obama | US | Double Dip | Oil | gasoline | us

Schork: Obama Pushing US to Brink of Double Dip Over Oil

By    |   Thursday, 17 Mar 2011 02:50 PM

Gasoline prices are likely to only continue soaring, and that could very well push the United States back into a recession, warns Stephen Schork, editor of the energy newsletter The Schork Report.

President Barack Obama's ‘hostile’ message toward drilling, coupled with strong demand from the developing world, is likely to push gasoline prices higher, he said.

Gasoline at $3.70 nationally is “all but a done deal” and $4 gas is ahead, Schork says.

“If we do see these oil prices remain well above $100, there is no choice but for gasoline prices to go higher,” Schork tells Newsmax.TV. “It’s going to be very difficult this summer.”

Story continues below video.



Benchmark U.S. crude has rebounded to above $101 a barrel despite the continuing crisis in Japan. European oil trades at more than $114 a barrel. Gasoline prices are determined by a mix of these two prices and can be affected by problems in refineries and local demand spikes and weather as well.

Thursday, gasoline pump prices dipped for a third day, to $3.546 per gallon, though the national average is still up about 42 cents per gallon since the middle of February. A gallon of regular unleaded is 75.7 cents more expensive than last year, the Associated Press reported.

Households now spend about 3.8 cents of each dollar on energy, Schork explains. If gas goes to $4, Schork says that figure would rise to 4.2 cents on the dollar.

“Every increase we see toward energy is going to be dollars taken out of the economy that would have been spent elsewhere. So it’s certainly going to put the individual households in strain this summer and it certainly does not bode well for a strong economic recovery,” Schork says.

“Given how tenuous the job market is, how poor the housing market is, we certainly have the potential of a double dip if we do see gasoline prices at these levels for a sustained amount of time,” he says.

The high price of oil really isn’t a supply problem, he says. Tapping the strategic reserve, as President Barack Obama has hinted he might, makes “no economic sense,” Schork says.

Rather, the United States needs to get its energy policy untangled, considering the stakes.

“What we’re getting out of Washington is a completely muddled message. We don’t know where (President Obama) stands,” Schork says.

A year ago, Obama was pro-drilling, not only in the Gulf but up the East Coast. The BP oil spill put a stop to that talk, at the risk of the entire economy, he says.

“We’ve backtracked. There are no permits being issued, we are driving business out of the Gulf of Mexico. It is certainly a hostile rhetoric we get out from the White House toward oil and gas development,” Schork says.

Subtract domestic supply and OPEC and foreign interests are in the driver’s seat. It won’t necessarily be a repeat of the 1970s global oil shock, Schork says, although that’s “on the table.”

Back then, he explains, Arab exporters were making a political point by disrupting supply. Today’s OPEC sees little to gain and much to lose from holding back oil. OPEC is likely to flood the market if oil stays above $100 a barrel for long, Schork says, to avoid damaging the economies of its biggest customers.

Nevertheless, the lack of a U.S. oil strategy at home isn’t helping, Schork says.

“It certainly does support the notion of higher prices. Simply put, our energy needs are only going in one direction: higher. And we do not have a coherent message coming out of Washington,” Schork says.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Headline
Gasoline prices are likely to only continue soaring, and that could very well push the United States back into a recession, warns Stephen Schork, editor of the energy newsletter The Schork Report. President Barack Obama's hostile message toward drilling, coupled with...
Schork,Obama,US,Double Dip,Oil,gasoline,us,economy
600
2011-50-17
Thursday, 17 Mar 2011 02:50 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved