What can be done about high oil prices
A customer pumps gasoline at a service station in San Francisco, Calif. What needs to happen for oil prices to drop?
Jeremy Hobson: Oil prices are slightly lower this morning in overseas trading, around $124 a barrel, but that is still very high. And those high oil prices are leading to high gas prices which are starting to really worry some economists who are concerned about our recovery and whether or not it could be derailed.
Josh Brown is with Fusion Analytics. He’s with us live from New York as he is every Wednesday. Good morning, Josh.
Josh Brown: Good morning.
Hobson: What kind of an impact could high oil prices have our economy?
Brown: You know, the concern here is that, in about two weeks, we’re going to get corporate earnings from all the biggest companies in the country and this is the first quarter they’re reporting where we’ve had really persistent, high oil and gasoline prices, pretty much throughout the whole quarter. So the impact is yet to be really seen. We’ll see it in the data and there’s definitely cause for some concern there.
Hobson: Cause for concern, well let’s talk about some of the solutions, Josh. We’ve got our sustainability reporter, Scott Tong with us from Washington and Scott, you’ve been looking at some ways the price of oil could potentially come down.
Scott Tong: Well Jeremy, let me give you three scenarios. The first one is brought to you by the letter S. More supply from countries like Saudi Arabia, Sudan, Syria, and Yemen -- we’ll throw in a Y, just for fun. Now these countries all have crude oil but politics one way or another limits how much they export to the world. And the world doesn’t have a lot of spare capacity, especially with sanctions starting to put Iran’s supply off limits.
Which brings us to scenario two: if Iran calms down. Analysts figure a Middle East “nervousness premium” has jacked up the price maybe 10 to 15 percent.
And the third scenario -- this is going to sound a little odd -- but it’s we sit back and do nothing and let the high prices do what they do, which is change behavior. Ever since the Libya crisis and the high prices from last year, we’ve started to drive more efficient cars and work jobs that require a little less driving. And less demand tends to lower prices.
Hobson: All right, Scott Tong, in Washington. Let me go back to you quickly, Josh Brown. Anything you would add to those things?
Brown: You know Congress is getting set to debate once again, I think for the third time, the Natural Gas Act. There’s something that I think is an actual, workable solution if we can just remove the politics from it. We are the Saudi Arabia of natural gas. If we were to get serious and start taking our 18 wheelers off of diesel and putting them onto CNG, compressed natural gas, that could be a really strong signal that we mean business in terms of an energy policy and can create a lot of jobs as well. So I think that that’s something that doesn’t get talked about enough but I think we should be watching for it.
Hobson: Josh Brown of Fusion Analytics. Thanks so much, Josh.
Brown: Thank you.