Oil in the U.S.

The Dow Jones Industrial average closed at 13,080 points on Friday. This is a significant increase from the peril the market experienced throughout much of the last 4 years. But, despite this increase, tensions in the middle east still remain and gas prices are nearing $4 a gallon here in North Carolina. This has led to movements across the nation for more fuel efficient automobiles, and transportation systems to alleviate the need for fuel. However, throughout the midwest oil rigs are popping up and are drilling, using new technology that enables them to gather oil that was previously too costly and too difficult to drill for. President George Bush started this movement during his terms by enacting drilling friendly policies, much to distain of environmentalists in the U.S. President Obama has continued his support for Bush's policies, which has led to a sharp increase in fuel production. "In 2011, the country imported just 45 percent of the liquid fuels it used, down from a record high of 60 percent in 2005. (Krauss, 2012)" This is a huge step for the U.S. economy, which brings up the question will the U.S. ever be fully energy independent? In my opinion we may see that day, with fuel "imports decreasing by 20% over the last three years from members of OPEC. (Krauss, 2012)" In fact the United States has actually begun to export fossil fuels, and may one day become a leading global exporter of fuels. This is a far cry from what is going on in the U.S. today, with President Obama only partially supporting the Keystone pipeline from Canada. The U.S. could one day become completely energy independent, but for now gas prices are still approaching all time highs and the tensions in the middle east are still looming.

Krauss, Clifford, and Eric Lipton. "U.S. Inches Toward Goal of Energy Independence." Nytimes.com. The New York Times, 22 Mar. 2012. Web. 23 Mar. 2012. <http://www.nytimes.com/2012/03/23/business/energy-environment/inching-toward-energy-independence-in-america.html?pagewanted=1&ref=economy>.

Oil Prices and Economic Outlook

Oil and gas prices have reached almost all-time highs with a "barrel of oil costing $109.77 a barrel" (CNNMoney, 2012). These oil prices are the highest since the bottom fell out of the stock market in 2008, where gas retailed at about four dollars a gallon. The rise of gasoline prices is puzzling because of the increased production of domestic oil, coupled with a decrease in demand for gasoline in the United States. The law of supply and demand states that when the supply of a product increases, inversely the price decreases because demand decreases, and vice-verse. But as we all know, the world is now a global economy, where tensions in the middle east effects markets around the world. The European Union placed an oil embargo on Iran in January, which has driven Iran to threaten to shut down the Straight of Hormuz. The sheer threat of closing down the straight will decrease trade significantly around the world, but mainly in European and Asian nations. This could cause the Asian markets, such as China to cool down, which would have an effect on the U.S. market. This all takes place in light of a recent economic recovery in the United States. This recovery could be halted with the global increase of gas prices, which as history shows that recessions follow spikes in the price of gasoline. There is however hope that Saudi Arabia will boost its production of oil, as well as the increased production of crude oil and natural gas in the United States. These two factors could help to alleviate fears and could continue economic growth world-wide.


Farrell, Maureen. "Will Oil Prices Kill the Stock Rally?" CNNMoney. Cable News Network, 26 Feb. 2012. Web. 26 Feb. 2012. <http://money.cnn.com/2012/02/26/markets/stocks_lookahead/index.htm?iid=HP_LN>.

NY1 News. "Senator Schumer Urges Saudi Arabia To Boost Oil Production." Senator Schumer Urges Saudi Arabia To Boost Oil Production -. 26 Feb. 2012. Web. 26 Feb. 2012. <http://manhattan.ny1.com/content/news_beats/political_news/156653/senator-schumer-urges-saudi-arabia-to-boost-oil-production/>.