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Politicians ponder price peak

Oil & Gas Journal

Sam Fletcher
Senior Writer

The July contract for benchmark US light, sweet crudes traded above $135/bbl on the New York Mercantile Exchange just prior to the May 26 Memorial Day holiday that marked the unofficial start of the summer driving season in the US.

With oil prices setting record highs almost daily, some developing countries such as Indonesia and India are having trouble maintaining fuel subsidies for their citizens. As a result, gasoline prices were expected to increase 20% in India and up to 30% in Indonesia. In an election year in the US, however, politicians are pressuring everyone from US oil companies to the Organization of Petroleum Exporting Countries to increase production, which they hope will lower retail prices for gasoline, diesel, and fuel oil, thereby encouraging US consumers to consume more.

In an attempt to show constituents they are taking action against rising prices, the US House passed legislation to stretch US antitrust laws to include members of OPEC. Critics claim targeting OPEC investments in the US as a source of damage awards in such cases could trigger an embargo of oil to the US.