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The Impact of Rising Oil Prices on Your Wallets

Liana Teixeira

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The price of oil reached over $108 per barrel last Monday; such an increase has not been seen in 30 months. The reason behind

Although this oil is also shipped to the United States, Libyan oil only made up approximately 0.63 percent of the $260.1 billion in oil imports in 2010 according to WorldCity.com. Canada, believe it or not, is the top provider of U.S. oil, followed by Saudi Arabia, Mexico, Venezuela, and Nigeria. Libya ranks low on this list, barely maintaining a top 20 spot. I

the hike up, however, is less clear. Many point the finger at the ongoing disputes taking place in Libya, while others accuse oil companies with being greedy.

Indeed, rebels in Libya have seized control over much of the east coast, preventing the steady export of oil from the country. And according to USA Today, analysts do not expect Libya to export much oil in the coming months due to the uprisings taking place in the country. However, Libya only supplies approximately two percent of the world’s oil, most of which is consumed by Europe.

Although this oil is also shipped to the United States, Libyan oil only made up approximately 0.63 percent of the $260.1 billion in oil imports in 2010 according to WorldCity.com. Canada, believe it or not, is the top provider of U.S. oil, followed by Saudi Arabia, Mexico, Venezuela, and Nigeria. Libya ranks low on this list, barely maintaining a top 20 spot. If the U.S. simply imports a small portion of oil from Libya, the question remains: why are oil and gas prices still increasing?

Professional oil trader Dan Dicker believes he understands the underlying issue behind the gas crisis. “There is no supply issue going on here-what we have is the perception of the possibility of a supply issue,” Dicker said to AOL’s DailyFinance.com, “A whole bunch of people are pouring money into an oil market trying to take advantage of what they perceive to be a real risk in supply. It’s a marketplace that I argue should not be allowed to be wagered on like a stock or bond.” Dicker also argues that if the government regulated oil trading to only include airlines and heating oil companies, “then the price of oil would fall by 50% overnight and our economy would be much better off.” Undoubtedly, U.S. government intervention is needed to some extent in order to regulate the price of oil and, subsequently, gas prices throughout the nation.

The national average of gasoline is now $3.662 per gallon, reports USA Today, but many gas stations retain higher prices. The Mercury gas station adjacent to the University of New Haven campus is an ideal example. Its price increases on gasoline have been rising for the better part of a month. Towards the end of March, a week-long stability (and even a slight decrease) in prices brought the cost to $3.62 per gallon of regular gasoline. This false sense of security shortly ended, with regular gas prices soaring to $3.81 by the beginning of April. Plus, Premium, and Diesel fuels are even higher than that, reaching almost $4.00 or more.

Traveling from point A to point B has not been this difficult since 2008, and Americans’ wallets are feeling the pressure at the pump. UNH Commuter Justin Bussell commented on the negative impact of the gas prices. “Even though I only live six miles away from the university, there is a noticeable change in the amount of money I am spending on gas,” Justin said. “I noticed myself eating out less often, and bringing food to college from home in order to save some money for gas.” Using alternatively fueled vehicles, Justin believes, is something the U.S. should invest in, so that the country can depend less on foreign oil.

As citizens prepare for that $4/gallon price to creep up, the government must also consider their role in oil trading. The apprehension felt by traders as a result of African and Middle Eastern hostilities is leading to unnecessarily high prices. Small businesses are also at risk; high gas prices result in less spending, which may force some businesses to increase prices. However, many are reluctant to charge more for fear of losing customers.

While minimal government regulations would easily fix the oil trading problem, Dicker explains that financial firms prevent the government from imposing limitations. “Large financial firms with a direct interest in oil trading have made so much money with oil that they can afford to lobby Congress to block any significant reforms.” Whatever the issue at hand, it is clear that some financial reform is needed in order to balance oil trading and make gas prices more affordable.

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The Impact of Rising Oil Prices on Your Wallets