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Obama Feels Squeeze of High Petrol Prices

25 Feb 2012

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President Barack Obama

Soaring petrol prices in America are threatening to become an economic and a political problem for President Barack Obama, reports Sky News.

In the past week the average price per gallon in the US jumped by 9 cents to $3.61.

In some states, like California, the average is much higher, reaching $4.20.

According to the AAA fuel gauge report, prices at this time of year have never been higher.

That's problematic for American consumers, who are accustomed, historically, to comparatively low petrol prices.

When petrol gets expensive, it is deeply unpopular.

A new Associated Press-GfK poll found seven out of 10 people surveyed think the issue in "deeply important".

In an election year, this is politically difficult for President Obama, who will face a Republican challenger in November.

High prices at the pump leave him exposed to Republican attack on his energy policies.

"Right now, we're experiencing yet another painful reminder of why developing new energy is so critical to our future," the President said, who has spent time this week promoting the expansion of domestic oil and gas exploration alongside the development of new forms of energy.

The White House has repeatedly said there is no easy solution and that America cannot drill its way out of the problem.

Obama has also been heavily criticised for rejecting a pipeline to carry oil from Canada to refineries on the US Gulf Coast, a move Republican presidential candidate Newt Gingrich called "utterly irrational".

Although some commentators say the US government can do little to control the price of petrol, Gingrich has tried to lay the blame at the President's door.

On his campaign website, he writes: "Today's high gas and energy prices are entirely a function of bad government policies.

"All that's keeping us from becoming energy independent is a lack of political will to do so."

But the problem is not just political.

High petrol prices could counteract some of the positive economic data emerging in the US in recent months.

In February, for example, confidence among US consumers rose more than forecast, and in January new home sales were stronger than projected.

Consecutive months of falling jobless figures have also helped to boost confidence.

But if people are squeezed too hard at the petrol pump, they will have less to spend elsewhere, and consumer spending is one of the biggest drivers of the US economy.

The price of petrol is primarily influenced by the price of crude oil.

This week Brent crude rose to a nine-month high of \$124 per barrel.

Prices have been climbing since last year, driven by high demand in China and concerns about the destabilising effect of the Arab Spring on oil producing countries in that region.

Growing tension over Iran and its nuclear ambitions has also raised concerns about the security of oil supplies.

But Americans are not the only ones being squeezed at the pump: despite the soaring prices, what US drivers pay is still dwarfed by charges in the UK.

Last week, petrol cost an average of 135.39p per litre in Britain, just under the record 137.43p set in May 2011.

The US price of $3.61 per gallon translates to roughly 79 cents (50p) a litre - making it less than 40% of the cost of filling up on the other side of the Atlantic.

Tags: Politics, World, Obama, HIGH PETROL PRICES

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