Crude oil prices in New York topped $100 per barrel on Wednesday, Feb. 23, up by $2.68 from Tuesday. Brent crude from the North Sea jumped by $5.47 to $111.25 in London.
Analysts are predicting that $120 per barrel will push the United States back into a recession.
The New York Times reported that a $10 hike in the price of oil pulls the gross domestic product down by half a percentage point within two years.
Nobuo Tanaka, executive director of the International Energy Agency, said that if oil stays over $100 per barrel all during 2011, "we would have the same sort of crisis we had in 2008."
Thus, goodbye to economic growth.
So where does the United States stand when it comes to developing its own resources? It could be likened to Nero fiddling while Rome burned ... The only difference being that by today's standards, Nero would be considered on the "fast track."
Meanwhile our international adversaries and would-be adversaries in the Middle East, up to their waists in oil, are raking in the wealth of the United States and enjoying it to the hilt.
Here the United States rests on its bottom, waiting for some act of Providence to save it from its self-induced energy woes.
There is some movement in the Republican side, however; Republican lawyers are promising hearings at some point. But the misery created by the inaction of the United States in this present energy crisis is not waiting.
Airlines are already adding fuel surcharges to the price of tickets. Federal Express and UPS are upping their fees. Increased costs for heating oil, especially in the Northeast, are putting a strain on personal budgets.
Food costs are expected to rise due to increased energy costs of the farmer for fuel for his farm equipment, to say nothing of increased delivery costs to get food to market.
The petrochemical business will face rising costs in the production of its plastic products. Economists worry about a "ripple effect" that could cause a reduced level of consumer spending.
Consumer spending accounts for two-thirds of all economic activity. In 1973, the increases in energy costs tipped the economy into a recession.
Today the economy has shifted from a largely manufacturing to a service economy. Therefore energy needs as a percentage of GDP is less. Cars and airplanes are more efficient and require less fuel. However, this does not mean that the United States is anywhere near out of the woods.
The United States is producing next to nothing of its own energy requirements. There is some movement in the direction of resuming offshore drilling in the Gulf of Mexico.
Sens. Mary Landrieu, a Democrat, and David Vitter, a Republican, both of Louisiana, are blocking confirmation of an Obama administration nominee in an effort to force the resumption of offshore drilling in the Gulf of Mexico.
Vitter will oppose acting on Daniel Ashe to lead the U.S. Fish and Wildlife Service until government issues 15 deep water exploration permits. Vitter is using a Senate procedure that lets a single lawmaker block action on a nominee.
"I support Senator Vitter's hold on the confirmation until the Interior Department issues 15 new deep water permits," Landrieu said on Feb. 16. "Louisiana's Congressional delegation will continue to apply pressure on the administration to end what amounts to an ongoing moratorium on oil and gas drilling that is costing Louisiana thousands of jobs."
In less serious times, this ploy might appear to have a humorous side. It's the use of political blackmail to gain the issuance of some deep-water drilling exploration permits.
Offshore drilling is supported by 64 percent of the American public. This is the highest level of support for offshore drilling since the Gulf War began. A new Rasmussen report finds the support for deep-water drilling, like that which ultimately led to the incident in the Gulf, is up to 55 percent.
"With gasoline prices rising and political unrest spreading throughout the Middle East, the United States must act now to responsibily develop our own American energy resources," said Rep. Doc Hastings, R-Wash., chairman of the Natural Resources Committee in a letter to colleagues on Wednesday, Feb. 23.
E. Ralph Hostetter, a prominent businessman and agricultural publisher, also is a national and local award-winning columnist. He welcomes comments by email sent to email@example.com
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