Over at the Washington Monthly, Rick Ungar opens up a subject that I've been wondering about for some time: why are gasoline prices going through the roof in a season when they usually decline? More below.
Apparently I'm not alone in wondering why, in low-demand February, we're seeing 87 octane prices creep back up to the $4.00 level, with predictions of $5.00 gas by the summer. Mr. Ungar (think of him as "the Good Rick) speculates that price manipulation might just be a political gambit by oil companies and their allies to slow the recovery and make President Obama's life just a little harder (because he's had a free ride so far.)
I'm also intrigued as to why high oil prices aren't considered by some authorities to have a role in the current economic crisis. I remember distinctly hearing an NPR interview several years ago with an expert on the energy market. If oil prices exceed $60 a barrel, said this expert, the world economy will collapse. A year or so later, when prices exceeded $100, I kept waiting for the outcry and the repercussions. I heard little or nothing.
When the Other Rick blamed high oil prices for the recession a few weeks ago, Think Progress, a source that I generally admire, labeled him "clueless." I think a more balanced analysis comes from Derek Thompson over at The Atlantic:
Santorum's mistake isn't in thinking higher gas prices mattered. Of course energy prices matter. Low energy prices contributed to the housing boom, just as $4 gas probably pricked the housing bubble. But his mistake is in thinking it was the only factor.
Read the whole thing: it's short and convincing.
This morning, Juan Cole, for whom I have a tremendous amount of respect, muddies the waters further by proposing another reason for the current spike in gasoline prices: sanctions on Iran.
As prices in February hit a historic high for this time of year, presaging perhaps $5 a gallon gasoline this summer in the US, Iran is still sitting pretty. The fragile European and US economies, however, may take a hit from higher transportation costs (the US will likely see a fall in summer travel and internal tourism). The same Republicans who complain that President Obama hasn’t been hard enough on Iran are cynically planning to campaign against him on his having caused higher petroleum prices, ignoring the role of sanctions on Iran and tensions with that country in the price run-up! I hate to say it but I told you so.
Again, well worth reading
the entire article (with Juan's columns, it's almost always worth the read. Also, Omar Khayyam.)
So, what is it? Are today's gasoline prices simply an example of market forces at work? Is it a subtle plot hatched in Republican smoke-filled rooms? Is Iran thumbing its oily nose at the rest of the world? Do oil prices have anything to do with the deep recession and the long recovery? I simply don't know – enlighten us all, O Kos-mind.