Oil prices soared Tuesday as tensions grew over key Persian Gulf oil shipments.
In afternoon trading benchmark crude jumped $3.80, or 3.8 percent, to $102.63 per barrel in New York.
Brent crude, which is used to price foreign oil varieties that are imported by U.S. refineries, rose $3.87, or 3.6%, to $111.25 per barrel in London.
Prices climbed as soon as exchanges opened for the first day of 2012 trading. Commodity prices tend to rise at the beginning of January as investors start the new year with a fresh round of trading. This year prices were driven by heightened concerns that Iran might try to close the Strait of Hormuz in the Persian Gulf to oil tankers, if Western nations impose new sanctions.
Iran warned the U.S. to stay out of the strategic waterway, where one-sixth of the world’s oil shipments pass every day. On Monday its navy fired a cruise missile as part of a military exercise.
The U.S. and European nations are mulling further economic sanctions against Iran because of its nuclear program. A standoff could result that would be damaging to the global economy.
A dustup with Iran could slow crucial oil supplies at a time when the world needs every drop. Global oil demand is expected to rise to a record 89.5 million barrels per day in 2012.
Three of the world’s largest economies — the U.S., China and India — continued to grow with increased manufacturing activity in December.
Meanwhile, Obama continues to dither over the Keystone XL pipeline.
This month, one year since the Deepwater Horizon explosion in the Gulf of Mexico, the Noble Clyde Boudreaux—an ultra-deepwater semi-submersible drilling rig—will start operations off the coast of Brazil. Until a few weeks ago it was stationed in the Gulf.
The two events are not unrelated. Moving the Noble out of U.S. waters is one of the adverse consequences of the Obama administration’s overreaction to last year’s Gulf spill.
Despite the president’s repeated claims that he’s been “encouraging” domestic oil production, administration policies have been driving drilling rigs out of the Gulf (six deepwater rigs in addition to the Noble have left the Gulf, with two more possibly on the way out). The overall result has been lower domestic oil production, slower economic growth, job losses and higher energy prices.
In the immediate aftermath of the Deepwater Horizon explosion and spill, President Obama announced a six-month moratorium on new deepwater drilling. According to the administration’s estimates, this cost nearly 19,000 jobs in the Gulf states alone—even though federal researchers then cut the figure by an ad hoc factor of 40%-60% to make the results more palatable.
In the months after lifting the ban, the administration slowed drilling permits to a crawl, effectively creating what some have called a “permatorium.” Dismayed by the delays, in February U.S. District Court Judge Martin Feldman tried to force the administration to act on seven pending permits, calling the inaction on permits “increasingly inexcusable.” Permitting has picked up recently, thanks in part to increasing political pressure, but remains far below pre-spill levels.
In December, the White House reversed course on its own five-year plan to open portions of the Eastern Gulf of Mexico, the Mid-Atlantic and the South Atlantic to offshore exploration. This effectively locks up an estimated 7.6 billion barrels of oil and 36.6 trillion cubic feet of natural gas.
Do you know what happens when the supply of a commodity goes down? Prices go up! And when gas prices go up, the price of every consumer good that is shipped using trucks and planes and boats also goes up.
Despite all the talk of green jobs, the overwhelming majority of stimulus money spent on wind power has gone to foreign companies, according to a new report by the Investigative Reporting Workshop at the American University’s School of Communication in Washington, D.C.
Nearly $2 billion in money from the American Recovery and Reinvestment Act has been spent on wind power, funding the creation of enough new wind farms to power 2.4 million homes over the past year. But the study found that nearly 80 percent of that money has gone to foreign manufacturers of wind turbines.
“Most of the jobs are going overseas,” said Russ Choma at the Investigative Reporting Workshop. He analyzed which foreign firms had accepted the most stimulus money. “According to our estimates, about 6,000 jobs have been created overseas, and maybe a couple hundred have been created in the U.S.”
Even with the infusion of so much stimulus money, a recent report by American Wind Energy Association showed a drop in U.S. wind manufacturing jobs last year.
Gulf Oil CEO Joe Petrowski says President Barack Obama’s weekend comments in Brazil that the United States looks forward to purchasing oil drilled for offshore by that nation “is rather puzzling,” and “hypocritical” as his administration has imposed a virtual moratorium Gulf Oil,Joe Petrowski, Barack Obama, Brazil, Drillingon domestic drilling. The signal to purchase more foreign oil comes after the U.S. Export-Import Bank invested more than $2 billion with Brazil’s state-owned oil company, Petrobras, to finance exploration.
“Any drilling, or any new production, especially production outside the Mideast – that is inherently unstable and probably is going to become more unstable as we move forward – is a positive,” Petrowski said Tuesday on Fox News.
“But why Brazil, when we could have the jobs and foreign exchange in this country, is rather puzzling – and I’d say somewhat humorous,” Petrowski told Fox News’ Neal Cavuto. “What is it about Brazil that they have that we don’t have?
“What concerns me – in addition to we are going to lose the jobs, and in addition to not having the foreign exchange – is one of the untold problems, I think, in the world oil markets, besides that we are getting too much of our oil from the Mideast, is 75 percent of our oil is being produced by government-run entities,” he continued.
“And I just have a theory that private companies are going to be more efficient in finding it, and getting it out at a more reasonable price, than state-owned companies,” Petrowski said.
Cavuto asked whether buying oil from Brazil is bad for the U.S. economy.
“It would be a lot better if we had the drilling here,” Petrowski said. “And it seems a double standard and it seems somewhat hypocritical [that] a country that desperately needs jobs, and we need them here, that we are encouraging other countries to create the jobs that we need.”
Obama has so much taxpayer money to hand out to China and Brazil, but now he wants to prevent AMERICAN oil companies from getting tax deductions for asset depreciation (depletion allowance).
What happens when we use American taxpayer dollars to stimulate energy production in other countries?
Gas Prices under Obama and Bush
We pay more for energy, that’s what. Because we shipped our energy sector jobs overseas.
At least $53 million in federal funds have gone to ACORN activists since 1994, and the controversial group could get up to $8.5 billion more tax dollars despite being under investigation for voter registration fraud in a dozen states.
The economic stimulus bill enacted in February contains $3 billion that the non-profit activist group known more formally as the Association for Community Organizations for Reform Now could receive, and 2010 federal budget contains another $5.5 billion that could also find its way into the group’s coffers.
An Examiner review of federal spending data found that ACORN has received at least $53 million in federal money since 1994.
Meanwhile, Obama gave $3 billion taxpayer dollars to ACORN, which has been indicted on voter fraud charges, and 0.35 billion taxpayer dollars to Planned Parenthood, which has been caught on film covering-up statutory rape. Why is it that organizations that support Democrats like ACORN and Planned Parenthood are below the radar, while Obama keeps complaining about oil companies? Does taxing oil companies make the price at the pump go down? Or rather, doesn’t taxing oil companies cause the price at the pump to go up? And if taxing companies is such a good idea, why did Obama’s favorite crony corporation GE make $14.2 billion in profits in 2010, but pay NOTHING in taxes?
WINTERY KNIGHT 