Oil prices have soared this week to as high as $100 per barrel – a three month high – courtesy the latest episode in Iranian sanctions and owing to the Saudi failure in extricating as much black gold as the West would’ve wanted. And now, the onus is clearly on Washington to conjure up the mechanism to tame the price surge. Also, there is the small matter of gas prices closing in on $4 per barrel, which makes the aforementioned taming task all more pivotal in this election year for the Obama regime. There are quite a few solutions that the think-tanks can summon, even though they run the wide gamut between being pragmatic and being over-optimistic.
The first option for the US obviously is to press the accelerator on oil exploration itself. As far as oil opulent zones are concerned there aren’t many richer regions than Alaska and more specifically the ANWR (Arctic National Wildlife Refuge); but again, exploring the zone or not is an extremely contentious debate in the US. Secondly, and arguably more realistically, opening the Strategic Petroleum Reserve is something that might help Obama counter the hiking gas prices. The US President has also been discussing the idea of selling $500 million worth of oil from the reserve, under the Republican’s pressure of course, and this could somewhat plug the global demand-supply disparity of oil and bring the price of gasoline down to something bordering on affordability.
With Keystone XL there is another pretty obvious solution to the predicament in the pipeline – pun intended. The 1700-mile pipeline would bring volumes of oil from the Canadian tar sands in Alberta. But this potential move has environmentalists raging as the project is touted as being detrimental to the global climatic conditions. Another option that various states are considering is new tax proposals with regards to gasoline. These proposals basically are designed to channel the state spending and work as the neutralizer in case the oil prices continue their northward trend. A controversial maneuver – at least for the big guns of the oil game – would be curtailing the tax breaks for the oil giants.
The final option, and obviously the most comprehensive one, is the “all-of-the-above” strategy for Washington, as stated by Senator Barasso. It is pretty evident that the oil prices in the US would obviously fluctuate in synchrony with the global prices and hence, in addition to the “all of the above” stratagem, or even absence thereof, the go-to play for Washington should be to control excessive oil usage. The more prudent the usage and handling of oil is, the lesser the nation would suffer owing to the pendulum that oil supply can become.
Digging the US out of the energy quagmire would not only have the snowball effect and control surging oil prices; it could be the decisive factor during this year’s presidential polls for Obama as well. There is a multitude of options hogging the Washington drawing board; earmarking the right one is crucial for the American and global oil markets.
