THE POTENTIAL ISSUE – AT 9:57 P.M. ET: This has been sneaking up on us, but its potential as a 2012 issue should not be underestimated. Inflation is one of the things that destroyed Jimmah Carter, an entirely delightful destruction. It can happen again if energy prices continue to rise. From AP:
NEW YORK — The national average for a gallon of regular gasoline topped $3 on Thursday.
It's the first time that the average retail price has been above $3 a gallon at Christmas. The average pump price rose about a cent and a half a gallon overnight, to $3.01, according to AAA, Wright Express and Oil Price Information Service. That's 14 cents more than a month ago and 43 cents higher than a year ago.
Pump prices have traditionally dropped after the peak summer driving season and into the winter, because fewer people are on the road. This year, however, gasoline prices rose as oil prices climbed from about $80 a barrel in August to more than $91 on Thursday. That's the highest it's been in more than two years.
Analysts think oil and gas prices will rise as the economy gets stronger and demand picks up. But some economists worry that high energy prices could slow the nation's economic recovery. A study by business management firm PortiaGroup says gas pump prices are already taking a bigger bite out of household spending: an average 7.4 percent of median household income this month compared with 6.5 percent in December of last year and 4.2 percent in 2008.
If higher oil prices persist, the average share of income spent on gasoline could rise to almost 10 percent by spring, with pump prices around $3.75 or more a gallon.
Most analysts say oil prices have been rising not because of strong demand and dwindling supplies, but on hopes that an improving economy usually means more demand for oil and gas.
COMMENT: This can really bite Obama, especially as his administration is seen as hostile to oil exploration. The Environmental Protection Administration, just this week, announced plans for very aggressive regulations of carbon emissions. That may, theoretically, be good for us in the long term, but in the short term it can devastate us economically, not a concern for environmental religionists.
And if Obama persists in his war on offshore drilling, that could raise fuel prices even more. This is one of those issues that rises up and bites a president. It does not go away easily, and it affects every family every day. When people see $4.16 on the pump, and they may see it by 2012, their next thought may well be of Barack Obama and his policies.
And they don't even give away mugs anymore.
December 23, 2010