The climbing oil prices could undermine the U.S. economic recovery and it is an extremely disturbing report for President Barack Obama as it could hurt his re-election chances.
Oil prices have risen following expectations of an increase in the demand as eurozone finance ministers came to an agreement on a rescue package for Greece and the crisis in Iran intensified. According to the American Automobile Association, gasoline prices could rise as high as $4.25 by the end of May.
Democrats are naturally worried. Meanwhile Jay Carney, the White House spokesman, has said that there are no magic solutions to rising oil prices. Certainly there is no immediate solution to the Iran crisis. Iran has already announced that it halted oil exports to the UK and France in reply to the European Union's decision to ban purchases of Iranian crude that was planned to begin in July. Iran has also warned the six European Union nations - Italy, Spain, Portugal, Greece, France and the Netherlands - about cutting exports to them.
Republican presidential hopefuls Mitt Romney, Rick Santorum and Newt Gingrich have already sought to put the blame for higher oil prices on the incumbent President. The resistance to offshore drilling and a pipeline from Canada by Obama administration, as well as his support for ending tax breaks for oil companies, have contributed to higher gas prices, according to Republicans. Democrats have long argued that with the major oil companies enjoying healthy profits amid high prices, they no longer need the tax breaks.
Without doubt the GOP field has seized on the high price of gasoline to slam the Obama administration’s energy policy. In a recent campaign, Rick Santorum suggested that Obama has a plan to keep gasoline prices high so as to keep Americans from driving more and, as a result, reduce carbon dioxide emissions.
“The president of the United States, when he ran for office, talked about – talked about how he could higher prices for gasoline,” said Santorum. “Why? Well, because he was concerned about global warming,” he added.
On the other hand, Carney presented statistics on domestic exploration in support of the Obama administration and said that the President favors various forms of energy, including higher fuel efficiency standards, nuclear reactor development and alternative energy research. Carney also said that U.S. oil production has been on the rise each year ever since Obama took office and is now at its highest in eight years.
With the presidential election just round the corner, much is being made about the candidates' plans for the economy. When Obama took over the White House, the Dow Jones industrial average was just below 8,000. The Dow has climbed by 62 percent since then. Another notable aspect indicating economic progress was the Labor Department's statement that weekly applications for unemployment benefits dropped for the fourth time in five weeks to the lowest point since March 2008.
However, the rising gasoline price could suffocate the signs of economic recovery and GOP candidates are by all means ready to exploit the situation to the utmost to tarnish Obama's popularity.