Wednesday February 23, 2011
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The price of oil on the international market at yesterday's close was $93.57 per barrel, an increase of $7.37 in one day.
That increase was because of the unrest in Libya which is, unlike Tunisia, Egypt, and Bahrain, a significant oil producer.
According to the AAA, prices at the pump have increased to $3.17 a gallon for regular gasoline, an increase of six cents in a week.
The New York Times reports:
"With consumers paying roughly 50 cents more a gallon than a year ago, analysts are warning that prices could easily top $3.50 by the summer driving season."
As an expert in the area of predicting gasoline prices, I am willing to bet a Starbucks Grande Mocha that we'll be peeking at $4.00 per gallon by this summer; $5.00 in California.
The other OPEC countries have announced they will make up the difference between what Libya doesn't pump/ship to ensure a stable price.
Why? Because at some point, higher oil prices will put enormous negative pressure on the fragile economic recovery in the west and having a double-dip recession doesn't help the OPEC producers which are using oil revenues to buy peace among their populations.
Oh, yes. This is all connected.
It is not unlikely that, just as Saddam Hussein did in Iraq, Moammar Gaddafi will sabotage Libya's oil fields. In fact, Time magazine reported last night:
"Gaddafi has ordered security services to start sabotaging oil facilities. They will start by blowing up several oil pipelines, cutting off flow to Mediterranean ports."
And it's not just the U.S.
The Daily Mail carried a piece today which raised a red flag saying,
"The soaring price of oil could derail the global economic recovery and tip the West back into recession, experts warned last night. Brent crude surged nearly $3 a barrel to $108.57 in London as the violence in Libya threatened to spread to other oil rich nations in the region."
Go to the Safeway. Buy milk, eggs, white bread, and peanut butter.
Someone much smarter than I am pointed out that the union activity in Wisconsin and Ohio does not reflect economic reality.
A labor union which goes on strike against a company knows that it cannot ask for more than the company can afford. If it demands too much and puts the company out of business, then all of the workers will lose their jobs.
Therefore, there is a natural (or, at least an economic) limiter on what a union can demand.
However, that limiter doesn't exist when public employee unions make demands of public officials.
The school system in Oshkosh, Wisconsin is not going to go out of business no matter how much the teachers demand. The city of Oshkosh might have to lay off health and building inspectors to pay for the teachers' demands, but the city will not close all the schools.
Having written that, I will also state that a teacher who has been in the classroom since she (or he) graduated from college; has gone on to earn an advanced degree and has been earning, at best, a modest salary on the promise he or she could retire after 20 years should be protected.
In New Jersey teachers who thought they could retire after 20 years are looking now at retirement after 35 years.
You might think - as I do - that retiring in your early 40's is too early. But, if that was the deal a teacher made with the state then the state should honor that deal. New teachers coming into the system can decide to agree or not agree with a new deal.
Finally, the Obama Administration has finally figured out how to get U.S. Citizens out of Libya. According to the AP:
"The State Department said late Tuesday it has chartered a ferry boat to evacuate Americans from Libya."
A ferry boat. Excellent.
Here are some of the evacuation rules:
-- Travelers will be allowed one suitcase and one small carry-on item;
And you wonder why no nation on the planet cares what the U.S. says any more.
On the Secret Decoder Ring today: Links to the NY Times, Time Mag, the Daily Mail, and the AP.
-- Pets will be allowed on the ferry but that they must meet European Union requirements;
-- Those who want be evacuated should be prepared to wait several hours and bring food, water and other necessities to the pier;
-- Those who take the ferry will be expected to reimburse the government for the cost.
Also a Mullfoto from the Memorial Bridge yesterday and a useless Catchy Caption of the Day.
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