Thursday 12 April 2012

Rising fuel costs threaten US economy


Peak Oil again.

Fed: Rising fuel costs cloud prospects for US econ. recovery
The Federal Reserve says soaring fuel prices in the United States have clouded the US economic prospects amid the Washington-led sanctions against Iran's oil industry.



12 April, 2012

While the economy keeps growing, rising gasoline prices can adversely affect consumer spending, thus diminishing the possibility of a quick recovery, the Fed said in a report published on Wednesday.

"The near-term outlook for household spending was encouraging," it noted, adding that “rising gas prices could limit discretionary spending in the months to come."

Commenting on the report, a senior economist with BMO Capital Markets pointed out that “high gasoline prices continued to worry the Fed's business contacts.”

Meanwhile, according to the CNNmoney survey published on the same day, nine out of 18 participant economists said that the rising oil prices is now a bigger threat to the US economy than Washington’s ongoing gridlock over the budget and fear of China’s economic slowdown.

The soaring fuel prices are widely believed to be an upshot of US-led sanctions against the Iranian oil industry.

On December 31, 2011, the US government imposed a new round of sanctions on Iran's financial and energy sectors, seeking to penalize other countries for importing Iranian crude or doing business with its Central Bank.

The EU followed suit by slapping similar sanctions on January 23, banning member states from importing crude oil from Iran or dealing with the country’s central bank.

On February 15, Iran's Oil Ministry announced plans to cut oil exports to six European countries -- including the Netherlands, Spain, Italy, France, Greece and Portugal -- as part of its countersanctions against the European Union.

The US and EU accuse Iran of pursuing a military program under the cover of its nuclear energy work despite the fact that the International Atomic Energy Agency (IAEA) has found no evidence to this effect.

Tehran refutes their allegations, arguing that as a committed member of the IAEA and a signatory to the Non-Proliferation Treaty it is entitled to peaceful uses of the nuclear energy.


And from the Western press...

Energy costs raise concerns for US growth
The US economy kept growing moderately in the late winter months but rising prices for gasoline and other energy products were beginning to worry producers and consumers across the country, said the Federal Reserve said.



12 April, 2012

"Reports from the 12 Federal Reserve districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March," the central bank said in its latest "Beige Book" summary of national activity.

It found several hopeful signs for growth, including steady hiring and shortages of skilled workers as well as brisk new-vehicle sales and improving residential real estate markets but with a strong dose of concern about energy costs.

"Manufacturers in many districts expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices," the Fed said.

Similarly, while immediate prospects for consumer spending were seen as bright, "contacts in several districts expressed concerns that rising gas prices could limit discretionary spending in the months to come."

The Beige Book, prepared this time by the Cleveland Fed based on information collected by April 2, has market interest because it is based on anecdotal reports from business people from coast to coast and thus reflects real-life conditions




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