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Gasoline prices are zooming past $4 a gallon, and the nation is hardly freer from the grip of imported oil or closer to robust economic recovery. With his approval ratings dropping precipitously, President Barack Obama is blaming speculators and investigating fraud and at the pump, when this mess is the direct result of failed federal energy policies.

By word and deed, the Obama administration has sought to limit off-shore oil exploration and development, and hasten the commercial viability of solar, wind and alternative vehicle technologies.

All this is based on two erroneous, but strongly-held beliefs among liberal policy makers, academics and pundits–increasing oil U.S. production would do little to lower U.S. gas prices, and but for the vested interests of multinational oil companies, mankind would have long ago harnessed renewable energy sources and freed itself from the sin of burning hydrocarbons. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Economists expect the Labor Department will report the economy added 185,000 jobs in April, after adding 192,000 in February and 216,000 in March. While stronger than in prior months, jobs growth remains too weak, and the economy is in danger of slipping into a second recession. Longer term, the nation faces fundamental structural problems that neither political party seems willing to address in a comprehensive and systemic fashion.

In the first quarter, bad weather slowed construction activity, rising gas and health-care prices tapped off consumer dollars and weakened demand in other sectors, and defense and state and local government spending slowed. GDP growth was a paltry 1.8%–much less than economists forecasted in January and well below the minimum sustainable rate.

Growth less than 2% to 2.5% is not sustainable, because many businesses can meet such modest growth in demand by improving productivity and laying off workers to maintain margins in the face of rising energy and other commodity prices. Layoffs slice household income, and a negative cycle of reduced spending begins.

Indeed, the four-week moving average for new unemployment claims moved up to 408,000 for the week of April 23 from 390,000 the week of April 2. A rate below 350,000 is consistent with a strong economy and above 400,000 is perilously close to recession levels.

Without stronger growth in the second quarter, the economy will cycle down into recession–it can’t likely continue to drag along at about 2%.

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 These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Gasoline prices are soaring past $4.00 a gallon in many places and driving will continue to be more expensive. Unless consumers are determined to again recklessly pile up credit card debt, higher gas prices will profoundly slow other purchases and the economic recovery.

Over a three-year period, most folks don’t have much control over how much they spend on rent and mortgage payments, utilities, tuition and food, or how much they drive. Gasoline absorbs 15% or more of most household budgets, and the necessity of getting to work and driving kids to soccer practice does not relent when gas prices jump.

With gas prices up from $2.75 a gallon since last September, higher prices translate into a 5% cut in discretionary income, and Americans will be eating fewer restaurant meals, wearing fewer new clothes, curtailing summer vacation plans, and postponing furniture purchases and home improvements.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Friday, economists expect the Labor Department will report the economy added 200,000 jobs in March. After adding 192,000 jobs in February, this would indicate the economy is finally accomplishing momentum.

The February gain was in sharp contrast to weaker gains the previous 13 months, and largely resulted from stronger, potentially self-sustaining private sector jobs growth.

As measured by GDP, the economic recovery began in July 2009, but the economy didn’t begin adding jobs until January 2010.

Through January 2011, the economy only gained 77,000 jobs a month, mostly thanks to stimulus spending, temporary business services, and health care and social services, which are heavily subsidized by federal and state governments. Job gains in the core private sector — private employment less temporary business services, and health care social services and temporary business services — averaged only 45,000 a month.

Core private sector jobs are so important because those have the potential to set off a virtuous cycle of hiring, consumer spending and more hiring. In February, this barometer of private sector vitality gained 170,000 new positions. A similarly strong core private sector gain will be needed to add 200,000 new jobs overall in March. If that is accomplished, we may finally be getting someplace. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Crises in the Middle East and Japan threaten to thrust the U.S. and global economies into a second recession.

Since the economic recovery began in July 2009, GDP growth has averaged only 2.8%, a pace insufficient to bring unemployment down to acceptable levels. And that rate of growth leaves the economy too vulnerable to the slightest hiccup and a deceleration into recession.

Prior to the turmoil in the Middle East, economists were forecasting 3.5% growth for 2011, but the surge in oil prices and gasoline will likely shave half a point–perhaps more–from that rosy outlook.

Should oil surge to $140 a barrel, gasoline prices would pierce $4.00 a gallon and U.S. growth could slow to a mere 2.5%. That would be barely self-sustaining and not enough to create many jobs–likely many fewer than the 1.5 million needed each year just to keep up with population and labor-force growth.

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A reader comments on the Gulf of Mexico oil spill:

Here’s an idea. It’s kind of disconcerting watching the video footage of the oil and tar balls washing up along the gulf shore and people just staring at them. Why isn’t every nonviolent criminal populating U.S. jails being put on a bus to the gulf and given some rubber gloves and a shovel. Oh, and make sure Bernie Madoff gets sent to a beach in Florida.

Where are the adults?

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

With oil still flowing nearly two months after the Deepwater Horizon explosion in the Gulf of Mexico, passions are running high, but reason, not rage, should guide the government response.

Sadly, President Barack Obama, by persistently scolding BP PLC (BP, BP.LN) and using inflammatory rhetoric, has done little to improve BP’s efforts to cap the well and mitigate the damage, or to foster effective cooperation between federal and state agencies that could improve those efforts.

The Coast Guard, Department of Interior and other federal agencies have limited resources to cap the well. Oil exploration and development is fundamentally a private sector activity, and only companies like BP and their contractors have the essential know-how and equipment to get that job done.

Suggesting Chief Executive Tony Hayward be fired or demanding the company create a multibillion damage dollar fund, without specifying in detail how it would work, only distracts BP from doing what it has already pledged to do–clean up the mess and leave whole those who have been harmed.

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