Crude oil for April rose to 108.70 a barrel on the NYMEX before settling at 107.83 at the end of the day, a gain of 9.8% over the year. Brent Crude oil settlement for April on the futures exchange in London was at 124.28 a barrel, which represents a 15% increase for the year.
The price of regular unleaded gasoline rose 3.3 cents overnight to $3.61 a gallon, according to motorist group AAA.
The cost of gasoline in the U.S. is expected to continue increasing as a more expensive summer grade enters the U.S. gasoline market and more drivers hit the roads for travel. Increased spending for gas has the potential to impact the level of discretionary spending in the overall economy and influence the political mood of Americans as they head to voting booths later in November.
Continued U.S. and emerging market growth, coupled with a volatile Iran over their nuclear program and the likelihood of more saber rattling antics as a result of facing tough international sanctions and an emerging oil embargo, will likely keep the price of oil high in the months ahead.
Meanwhile, Syria is politically unstable, on the precipice of a full scale civil war, and a looming threat to stability in the Middle East.
Iran’s nuclear program
The L.A. Times wrote yesterday that the latest U.S. intelligence report indicates Iran is pursuing research that could enable it to build a nuclear weapon, but it has not taken efforts to do so thus far.
“Although Iran continues to enrich uranium at low levels, U.S. officials stated they have not seen evidence that has caused them to significantly revise that judgment. Senior U.S. officials say Israel does not dispute the basic intelligence or analysis.” the L.A. Times reported.
The article explains that that U.S. spy agencies have not seen any evidence yet of a decision-making structure on nuclear weapons around Khamenei, according to David Albright, who leads the nonprofit Institute for Science and International Security and is a high level expert on Iran’s nuclear program.
America’s Energy Policy
Yesterday President Obama spoke about American energy at Coral Gables, Florida on the campus of University of Miami. During Obama’s speech, he explained that oil costs are increasing again for Americans because of the growing demand for oil in energy markets and rising political tensions in the Middle East.
Obama admitted that there is no “silver bullet” to quickly produce more gas and emphasized that “we’re already drilling.” He proposed ending $4 billion in government tax subsidies to oil companies. ” Its time to end taxpayer giveaways to an industry that never been more profitable and double down on a clean energy industry that’s never been more promising” Obama emphasized.
If only Obama could convinvce more Republicans that more governement investment won’t end up like Solyndra which has scarred Obama’s green energy platform and caused many to question whether the U.S. government is truly capable of successfully investing in green energy technologies without mismanaging the funds and receiving poor returns.
Federal officials in the Obama administration previously awarded Solyndra with a half billion dollars in loans to develop solar energy but the company suddenly closed and left many questioning the lack of accountability and transparency in the deal.
Still, despite the setbacks the future development of green energy technology does offer the promise of better efficiency and less environmental disruption. This is true not only for the U.S. and European markets but also for emerging markets like Brazil and China where the middle class is growing and seeking to possess modern conveniences which require more energy sources that are limited or finite.
The development of green technology is bound to gain more traction in the 21st century. The Chinese government has already invested heavily in green technology sectors such as solar energy and LED lighting, causing an over-supply in the global green energy market and a disadvantage for private western energy companies that are not completely dependent on government subsidies. Air pollution is a major problem in China’s cities and some of their airports such as the one in Bejing have been shut down due to air pollution.
President Obama spoke about the need for the U.S. to find good solutions with green technology in the future. “We need to keep developing the technology that allows us to use less oil in our cars and trucks, in our buildings and plants. That’s the strategy we’re pursuing and that’s the only real solution to this challenge” he said.