The price of gas at the pump is now averaging $3.65 a gallon in California and has already edged up to $4 in San Francisco and Chicago. Nationwide, it’s at $3.38, a 20-cent rise in the last week (six cents last Friday alone). Meanwhile, in testimony before the Senate Banking Committee on Tuesday, Federal Reserve Chairman Ben Bernanke spoke optimistically of the economy and dismissed the impact of soaring oil prices, spurred by turmoil in the Middle East. “The most likely outcome,” he said, “is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation.”
Of course, let’s take it for granted that no one inside Washington’s Beltway has to fill his or her own car with gas. For them, pain at the pump may indeed feel “temporary and relatively modest.” Tell that, however, to the official 9% of unemployed Americans who still have to drive a car in what Bernanke and everyone else who isn’t suffering seems to agree is not a recession. (In 1940, the last year of the Great Depression, the unemployment rate was at 14.6% -- and in those days they still hadn’t stopped counting people too discouraged to look for work.) In that light, consider what’s already happening at the pump as the lifestyle equivalent of murder and now imagine that, by summer (if not significantly earlier), the price of a gallon of gas nationwide may, as just before the 2008 global economic meltdown, close in on the $4 a gallon mark and perhaps still be rising.
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After all, oil fears have, as the New York Times business page put it recently, “rattle[d] the oil world” -- and there are already the first fearful mutterings about a coming “oil shock” or even a $5 price at the pump. With good reason. Middle East oil supplies are now far more vulnerable to every kind of disruption, including sabotage, than most people realize.
As Juan Cole wrote recently, “Workers in the [Persian] Gulf unhappy with their lives, unlike Wisconsin school teachers, can fairly easily disrupt the economy if they choose.” And keep in mind that that’s only the short-range view. If you happen to be energy expert Michael Klare, author of Rising Powers, Shrinking Planet, and a man perpetually ahead of the curve when it comes to a future of limited resources, you know that this is just the beginning of the end of the oil age, the collapse of the old oil order, and part of our rude entry into a world of extreme energy. He’s been pointing us in this direction for years. Brace yourself, says Klare, right now we’re only experiencing the first tremor from an “oilquake” that could shake our world to its core.