Friday, February 25, 2011
Higher oil, gasoline and food prices on the way for Hawaii
by Larry Geller
Reuters has just reported that indeed Libya will probably soon stop exporting oil for security reasons. Add to this the uncertainty over safe passage of oil tankers through the Suez Canal, and markets, as they say, are getting jittery.
Market mumbo-jumbo aside, oil prices are already on the ascent in the USA even though most Libyan oil production goes to Europe. Oil was $103.41 a barrel yesterday (Thursday 2/24/2011), an increase of about $20 in a single week. Gasoline prices jumped 6 cents a gallon on average today (Friday) alone.
Forbes is concerned:
As blood runs to the river in Tripoli and around Libya, with anti-Gadhafi rebels taking much of the oil-rich coast, investors have begun to seriously worry about the possibility of oil prices derailing an economic recovery that is barely beginning to gain traction in the U.S. and around the world.
[Forbes, What Will Oil At $100 Or More Mean For The Economic Recovery?, 2/25/2011]
Hawaii should be concerned as well. It has done nothing to protect itself against the consequences of high oil prices (see: Will loss of Libyan oil threaten US with another recession?, 2/24/2011).
We should clearly be working to reduce development of precious agricultural land, accelerate alternative energy development, and revisit the concept of price caps to moderate speculative energy price increases.
To do that would mean to break with tradition. Developers now call the shots, and they could care less whether we grow our kale in Koa Ridge or buy it at Safeway. HECO makes its profit burning fossil fuel and is in no rush to be put out of business.
The US support of murderous dictators may well come home to roost as our puppets lose control of their oilfields. Whatever happens in the Mid-East, and who can predict, Hawaii will bear the brunt of prices increases since we have allowed ourselves to remain so dependent on oil.
It’s never to late to work at becoming more self-sufficient in energy and food.
It is my understanding that the real culprit behind commodity prices going up is good old Goldman Sachs. Unregulated speculation by Goldman will put another dagger in the heart of the recovery. Where have we seen this picture before?