Price Of Oil Keeps On Rising

Economists aren't expecting a strong economic recovery in 2012, but that hasn't stopped oil prices from steadily rising. In case you haven't checked lately, crude oil is selling today for around $110 a barrel.

Rising oil prices are usually a sign of a growing economy, since countries need more energy to produce more goods and services. That demand tightens supplies and puts upward pressure on oil prices.

That's hardly the case at the dawn of 2012. Economic growth in the U.S. was weaker in 2011 than in 2010. The European debt crisis threatens to throw Eurozone economies into recession, and with them, much of the rest of the world.

But oil prices have risen as Iran, feeling increasingly isolated because of world opposition to it's nuclear program, has publicly threatened to close off the entrance to the Persian Gulf, choking off the world's oil supplies. Since early December, oil prices have been rising as a result.

Arab spring

Last year about this time oil prices started to rise for a different geopolitical reason. Unrest in Tunisia spread to Egypt, where the government of President Hosni Mubarak was driven from power. Of more immediate impact on the oil market, civil war broke out in Libya, cutting off the supply of that country's crude oil.

Oil prices skyrocketed on fears the “Arab Spring” contagion might spread to other Middle Eastern oil states – most notably Saudi Arabia. Oil traders have reacted to the political crises – both real and feared – by bidding up the price of oil.

All of that, of course, eventually trickles down to consumers. U.S. gasoline prices, which had been steadily falling throughout the Autumn, started going up again before the end of the year.

The national average price of self-serve regular today is $3.279 a gallon, up nearly five cents in the last week.