Obama Aides: Modest Growth, But Wary Of Oil Prices

Amid predictions that the economy's recovery will continue at a moderate pace, White House officials are keeping an increasingly wary eye on oil prices, worried that an election-year spike in the cost of gasoline could dampen consumer confidence and quash President Barack Obama's recent economic and political gains.

Obama advisers point to oil's $23 per-barrel increase in the first half of 2011 over 2010 prices as the factor that eroded purchasing power and slowed growth last year. At the time, unemployment remained stuck at 9.1 percent for three months, and by August Obama's approval rating stood at a low of 38 percent.

In an annual report issued Friday, Obama's economic advisers drew attention to improved economic data and a range of private sector forecasts that place unemployment at between 8.0 and 8.6 percent for the end of 2012. And they note that economic growth so far has been nearly as fast as the recoveries after the 1991 and 2001 recessions.

But gasoline prices -- right now at a national average of $3.53 per gallon and rising -- are higher than they were at this time last year. Amid continued turmoil in the Middle East and building tensions with Iran, investors are betting that supplies will remain tight in the months ahead and Obama administration officials worry that any disruption in the flow of oil from Iran will result in a rise in global prices.

Obama has been using the threat of higher oil prices as justification for extending a 2 percentage point payroll tax cut through the end of 2012, thus avoiding a $40 reduction in the average worker's paycheck.

"When gas prices are on the rise again -- because as the economy strengthens, global demand for oil increases, and if we start seeing significant increases in gas prices, losing that $40 could not come at a worse time," Obama said this week.

And Alan Krueger, the head of Obama's Council of Economic advisers, praised congressional passage of the tax cut extension, saying it would "provide some insurance again potential shocks that might be coming our way from gasoline because of developments abroad or for other reasons."

Obama aides say that even with the payroll tax cut extension, the threat of higher gas prices striking while the economy is recovering moderately has created anxiety in the White House.

Last year, as prices rose, Obama authorized the sale of 30 million barrels of oil from the country's emergency reserves. It was the largest release ever from the U.S. Strategic Petroleum Reserve.

This week, White House spokesman Jay Carney said Obama was looking to address dependence on foreign oil by increasing domestic production of oil and gas and increasing spending on clean energy. But those are efforts would have little impact on short term price spikes.

As for tapping the Strategic Petroleum Reserve once again, Carney said, "we never take options off the table."

Friday's report comes amid a recent spate of good economic news for the administration. Unemployment for January was 8.3 percent, auto sales are up, unemployment aid applications are down, and factories are producing at a healthy pace.

But the report raises says the European debt and financial crises present another red flag for the U.S. recovery.

"Shrinking purchases of American goods and services by Europeans could have a significant impact on U.S. employment in several states," the report states.

Moreover, the report says, any declines in confidence in Europe could hurt the ability or willingness of European firms to invest in U.S. companies.


You must be logged in to post comments.

Username:
Password (case sensitive):
Remember Me:

Read Comments

Comments are posted from viewers like you and do not always reflect the views of this station.
  • by Concerned on Feb 18, 2012 at 05:49 PM
    There's no doubt in Obama is a socialist, leftist, anti-American. Any fool who thinks this President gives a darn about them, their way of life, or what it's like to work hard nearly everyday is a helping this gang in D.C. to tear this great nation apart. Honestly, I pray for the success and safety of our country. But I'm not sure most people really want what's best for our nation anymore. It seems the majority don't care. Lastly, anyone who votes for person based on the color of his skin is a racist. That's right, a racist. Stop voting for this guy simply due to his skin color. Get real, he's destroying this country from the inside out.
  • by Mr. America Location: downeast on Feb 18, 2012 at 03:04 PM
    I only wish gas prices were the only problem,how about food,and electricity prices.Obama has failed as president,all the lies about a upsurge in the economy cannot hide that fact.To the world he is a joke,he has no respect from any leader,how can a person that has no power in any ones eyes help any situation.Just ask yourself am i better off now than i was four years ago?The bad thing about this joke is that the greatest nation on earth is paying the price.
  • by Anonymous on Feb 18, 2012 at 02:26 PM
    I think Obama wants gas prices to be high. In some twisted reality of his he thinks that if prices stay high it will force people to buy hybrids or his Volt. There are plenty of things he could do to bring the price down but he won't. Obama supporters you should ask yourself why that is?
  • by Anonymous on Feb 18, 2012 at 01:01 PM
    Gasoline prices have been chronically high since he took over. He is only worried about being re-elected, he could careless about the middle class.
WITN

275 E. Arlington Blvd. Greenville, NC 27858 252-439-7777
Copyright © 2002-2016 - Designed by Gray Digital Media - Powered by Clickability 139568998 - witn.com/a?a=139568998
Gray Television, Inc.