The political unrest in the Middle East and Libya has led to skyrocketing prices at the pump in recent weeks. Last week was no exception with crude prices closing at $104.42 on Friday, the highest benchmark U.S. crude close since September 2008 prior to the recent weeks. The Middle East; however, is not the only reason for rising gas prices according to AAA Autoclub South. The group reported that the average price of a gallon of regular unleaded gasoline in Florida was $3.546, up from $3.38 a week earlier and $3.008 a month earlier. A year to date, gas was priced at $2.662 in the state. The national average price of a gallon of regular unleaded is $3.50, up 15 cents from a week earlier.
The most sharp and most recent spike in oil prices is believed to be the result of a fear of supply limitations incurred should the conflict spread further than Libya. Retail prices are expected to increase once again this week with the average prices over $3.50 a gallon.
The drop in unemployment to 8.9 percent, the lowest level since 2009 also drove the $6.54 per barrel spike last week on the New York Mercantile Exchange according to the report.
Should the trend of rising oil continue to persist in an economy that while recovering is not recovering fast enough, the U.S. may need to look into alternatives to foreign oil. And they may need to look beneath their feet. Gas prices are predicted to rise as high as $5 in 2012 and while that’s a while away, prices that high could chip away at economic improvements. With people spending more money day-to-day on gas, they’ll spend less money on other items. They’ll be unable to afford plane tickets, which have risen three times already in 2011, vacations in general and other forms of consumer spending that will drive up the economy.
So has the time come to drill more domestically? That remains to be seen, but the topic of conversation is likely to be revisited. (The last time during the 2008 election when Sarah Palin coined the phrase, “Drill baby, drill.”) Pros, like the oil sales going toward domestic companies and fewer ties between prices and global politics may be enough to tip the scales if oil prices reach a level where they threaten other things on the political agenda like job growth and consumer spending.
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