Globe and Mail’s Brian Milner writes: Now that the U.S. economy is showing signs of life after debt, President Barack Obama has decided it’s safe to hold up his administration’s less than stellar economic record as a selling point on the campaign trail. But one big dark cloud still hovers overhead: the steadily rising price of oil in general and gasoline in particular.
Oil prices are plainly headed in the wrong direction for an economy still in the early stages of recovery and reliant on energy imports. Benchmark Brent crude closed in on $125 (U.S.) a barrel Friday, a hike of more than 30 per cent so far this year.
But what really scares sitting politicians in an election year are sharp jumps at the pumps. U.S. retail gasoline prices rose again last week, to a national average of $3.83 a gallon, an increase of more than 55 cents so far this year. In half a dozen states, including politically important California and New York, the price is already north of $4. Canadians would be delighted to be paying the equivalent of only slightly more than $1 a litre. But Americans are fuming.
The good news for President Obama and his brain trust is that these price trends won’t continue.
“What we’ve had is a tight [oil] market,” says economist Philip Verleger Jr., who has devoted much of his long career to digging deep below the surface of oil and other commodity markets. “I think it is in the process of unwinding.”
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