JUDY WOODRUFF: The price of oil on world markets climbed again today, closing above $106 a barrel. That and the rising price of gas at the pump provided political fuel for Republican presidential hopefuls.
Just as the U.S. economy shows signs of strengthening, the price of gas is starting to hit American drivers where it hurts -- again.
MAN: It's crazy. It's expensive. It's going up and up.
WOMAN: It's ridiculous.
JUDY WOODRUFF: The average price for regular reached $3.58 a gallon this week, according to the Energy Department. That's up about 40 cents from a year ago, with most of the increase coming since New Year's.
Not surprisingly, it's becoming an issue again in the presidential campaign, with Republicans blaming President Obama's energy policy.
MITT ROMNEY (R): He hasn't taken advantage of our oil resources. And he has failed the -- the only no-brainer decision I can recall a president failing in quite some time, which is to say no to the Keystone pipeline.
NEWT GINGRICH (R): I believe if we go all-out in creating American energy independence, we're going to get gasoline down to between $2 and $2.50 a gallon. It was $1.13 on average the four years I was speaker. It was $1.89 when Barack Obama was sworn in.
JUDY WOODRUFF: Obama administration officials cite an array of causes, including Iran's decision to cut off oil exports to France and Britain and, with improving economies, growing investor speculation on the surging price of petroleum.
White House Press Secretary Jay Carney summed up the situation at a briefing today.
JAY CARNEY, White House press secretary: There are no magic solutions to rising oil prices and the pain that Americans feel at the pump. This is a -- there -- the fact is, is that the president is very aware that the -- of the impact that the global price of oil has on families.
The fact is, is that American oil production is at its highest now than it has been in eight years. Moreover -- and this goes to our actions -- over the past three years, we have opened millions of new acres for oil and gas exploration.
JUDY WOODRUFF: For now, prices are expected to keep rising, with the average topping $4 a gallon again this spring.
For more about what's behind the run-up in oil prices and the political implications, I'm joined now by John Kilduff, an oil analyst and founding partner at the New York-based hedge fund Again Capital, and Michael Shear, political correspondent for The New York Times and chief writer for the newspaper's political blog, The Caucus.
Thank you both for being with us.
John Kilduff, to you first.
Why is the price of oil going up right now?
JOHN KILDUFF, Again Capital: Well, as your report pointed out, Judy, right now, the tensions surrounding the Iranian nuclear situation are at the highest I can remember them being, and they're for real, that the rhetoric on both sides is significant.
The support the U.S. is getting to -- from the Europeans to embargo Iranian oil, to not buy that oil and to cut them off financially is as high as I ever could see. And the Iranians are being backed into a corner. And then on the other side of it, if you will, the desire by Israel to want to attack Iran's nuclear facilities also seems to be at the highest level that I can recall.
You had warnings from the U.S. and the U.K. today to them not to do it any time soon. And even Senator McCain was in Jerusalem today. His statements hit the tape in the marketplace today, saying that there are significant tensions between what the Israelis and what the U.S. wants to do. So the market is keying off these signals and are intensely worried about really what amounts to a third of the world's oil being in jeopardy if there's a conflict of any kind.
JUDY WOODRUFF: John Kilduff, you also mentioned to us, frankly, the fact that the economy is looking up.
JOHN KILDUFF: That is the other supporting factor here.
The U.S. employment picture in particular and a lot of the coincident economic indicators, the various Federal Reserve reports that have come out over the past couple of months now have all indicated a growing U.S. economy, which speaks directly to increased gasoline demand. And we also now see the Chinese stepping in to take measures to bolster their economy to make sure that their energy-intensive economy continues on.
So that is also keeping oil demand strong globally. And having supplies now threatened only adds to this $105-a-barrel price that we're at.
JUDY WOODRUFF: And, John Kilduff, one also hears about the role of speculation, investor speculation. How big a factor is that?
JOHN KILDUFF: Well, there's no doubt that there's investors of all stripes right now betting on the fact that there's going to be a conflict with Iran, that the global economy is going to outpace available oil demand and pushing the price up ahead of time.
These investments, though, you have to remember, are made to either hedge an airline's fuel cost or offset the damage that other parts of a stock portfolio or a bond portfolio are going to take from a spike in energy prices due to a tight supply-demand environment.
JUDY WOODRUFF: So, Michael Shear, the Republicans, we have already heard they are picking up quickly on this. When it comes to the candidates, when it comes to the Congress, is there a unified theme? We did hear from Romney and Gingrich, but is there a unified theme to what they're trying to get across?
MICHAEL SHEAR, The New York Times: I think so.
I mean, the Republicans both on Capitol Hill and on the campaign trail think they've got a winner here. They think that, you know, the gas prices both affects people in the short term. And if they can, you know, blame President Obama for what people feel like when they go and pay $60 to fill up their car, that's a winner.
They also think that it folds into the broader narrative they're trying to paint about President Obama's handling of the economy, which is largely tied to how people feel they're doing economically, whether they think things are going in the right direction or the wrong direction.
And higher gas prices give people a sense that it's just not going in the right direction. And that helps the broader Republican argument against the president.
JUDY WOODRUFF: Are they also bringing up the Iran uncertainty, the improving economy, the kinds of things we just heard from John Kilduff?
MICHAEL SHEAR: Sure. They'll bring that up. But, of course, it's in their interests from a political perspective to talk less about kind of the underlying economic factors that are maybe outside of the president's control, and focus more on what they claim the president could do or is not doing to fix this situation.
Now, the truth is that, you know, the administration will push back and say, look, we have opened up a lot of areas to drilling, as your report pointed out. And the truth is that the president may not be able to do anything in the short term to head off these prices, because the -- they're being driven by forces that are global in nature and not centered here.
But the Republicans aren't going to focus on that. They want -- they want people to believe and to understand that it's the president at fault.
JUDY WOODRUFF: Well, we did just hear some of the White House push-back there from Jay Carney. But what more does the White House have to say to back up its argument that it's not the fault of the administration?
MICHAEL SHEAR: Well, there's sort of a dual track that they're taking, both defensive and offensive.
On the defensive side, you sort of heard it from Jay Carney, that the president has been doing a lot to kind of it in place policies that would over time drive oil and gas prices down. That's more exploration, more permits for drilling. There are also, though, the Democratic Party, you know, on Capitol Hill and the allies of the White House are going to push on this issue of oil subsidies.
The president's been hammering the Republicans on the subsidies, the federal government subsidies that go to the oil companies. Of course, the oil companies are going to be making profits because of the price of oil as high as it is. And so the Democrats think they have a really good argument to tell people, look, at a time when these oil companies are making so much money, this is the last time that we need to be giving them more subsidies.
JUDY WOODRUFF: Michael Shear, fair to say the White House is focused on this debate, closely focused on this debate that is under way?
MICHAEL SHEAR: I can definitely tell you, having talked to the folks at the White House, they are concerned. They know that this happens every year, but every year it seems to spike higher.
And, of course, this is an election year. It's Mr. Obama's reelection year. And it's something they have got their eye on carefully, both to make sure that they push back against the Republicans and to make sure that the president is expressing, as you heard Jay Carney say a few minutes ago, expressing that he gets it, that he understands that this is hurting people.
JUDY WOODRUFF: John Kilduff, coming back to you, historically, how difficult has it been for presidents to do something about oil, the cost of oil, the cost of gasoline in a way that has a material effect on what people see, what they pay?
JOHN KILDUFF: Well, it seems to bedevil administrations of all stripes and parties. And each administration seems to blame the previous one for a lack of an energy policy.
I can recall President Clinton having to release the Strategic Petroleum Reserve in the final months of his administration back around 2000. So it's -- these projects take a long lead time. The thing you need to -- it's commodities, Judy, so I would like to point out that the way to lower the price of commodities is to, A., produce more and, B., use less of it. That's the magic formula there.
These projects require hundreds of millions, if not billions in investment, require a long lead time. And also you have to deal with the vagaries of the boom-and-bust cycle of energy prices. In 1998, when prices got down to $10 a barrel, it was ruinous to our domestic oil production. It took a long time to come back from it. And we're only coming back to it now because there's a new technology that's emerged because of $100 oil.
And that's the shale oil and the fracking, which has its own issues surrounding it.
JUDY WOODRUFF: And, just quickly, finally, Michael Shear, how is all that playing into these back-and-forth arguments between the White House and the Republicans?
MICHAEL SHEAR: Well, I mean, I think the White House is eager to put out the message that, on the efficiency side, they have driven the efficiency for autos up, that they're focused on green energy.
That's a big point of contention between the White House and the Republicans. You know, the president likes to talk about this all-of-the-above energy policy that he has to both increase production and increase the amount of domestic oil that's produced here, but then also to reduce the demand.
And, you know, it's not something that is going to happen in a short order, but it's definitely going to be a real focus of the campaign in the next months.
JUDY WOODRUFF: Michael Shear, John Kilduff, we thank you both.