High gas prices: How big a problem for Obama?
The last five times gas prices have spiked, the incumbent party has lost the presidential election. On Tuesday, the national average price of gasoline was $3.57 a gallon.
When it comes to gas prices, President Obama is probably watching them rise with just as much consternation as people who are tanking up every day.
The reason: The higher the price, the more unpopular a president, studies have found.
In fact, the last five times gas prices have spiked, the incumbent party has lost the presidential election.
“If the rising price of gasoline persists, as some analysts think it will, it is bound to affect [Mr. Obama’s] popularity,” says Larry Sabato, a political scientist at the University of Virginia in Charlottesville.
The five elections where gas prices may have had an impact were in 1976, when Gerald Ford lost to Jimmy Carter; in 1980, when Mr. Carter lost to Ronald Reagan; in 1992, when George H.W. Bush lost to Bill Clinton; in 2000, when Al Gore lost to George W. Bush; and in 2008, when John McCain lost to Obama.
On Tuesday, the national average price of gasoline was $3.57 a gallon, according to AAA’s Daily Fuel Gauge Report. That’s up 6 cents from a week ago and 19 cents from a month ago. Also on Tuesday, the price of oil in the United States rose by about $2.50 a barrel, to some $106 a barrel. Oil markets have become increasingly nervous about the possibility of an Israeli attack on Iran’s nuclear facilities.
For every sustained rise of $1 in the price of a barrel of crude oil, the price of gas rises 2.4 cents a gallon at the pump.
For Obama, the risk of rising gasoline prices is even more immediate than Election Day. If the costs continue to rise, they could adversely affect the economy.
“The way it works is when we hit $4 a gallon, it starts to have an impact on consumer behavior. It’s like a psychological trigger, an inflection point,” says Dennis Jacobe, chief economist at Gallup in Washington. “If the price goes past $4 a gallon, that will slow the economy.”
A slowing economy could be a big detriment for Obama, Mr. Sabato says. “The economic recovery is fragile enough,” he says. “There has been nothing but bad times in his administration. A slowdown reduces the incentive to reelect him.”
The actual impact, Mr. Jacobe says, will depend in part on the direction and speed of gas prices, since consumers “react to what they expect the changes to be.”
As higher prices sink in for consumers, they start to cut back on discretionary spending. This ripples through the economy, with retailers cutting their orders and businesses becoming more conservative in their spending.
Still, the public does not necessarily blame the president for rising prices. Last May, a poll conducted by the Pew Research Center found that 31 percent blamed greed, oil companies, and speculators for the rising prices. Another 19 percent blamed wars and unrest in the Middle East. Only 14 percent blamed politics or policy.
But no matter what, Obama is likely to hear criticism from Republicans and the oil industry.
In a statement Tuesday, House Speaker John Boehner (R) of Ohio blamed Obama for rising gasoline prices. “President Obama has thwarted more American energy production at every turn – from his refusal to back bipartisan, House-passed energy bills to his rejection of the Keystone XL pipeline – and now Americans are paying the price every time they fill up,” said Speaker Boehner.
His position is not that different from the oil industry’s.
“By any measure, the current policies governing America’s energy development have failed,” said Thomas Pyle, president of the Institute for Energy Research, a pro-oil industry policy group, in a statement on Feb. 16. “The past three years have been marked by cancelled lease sales for the Outer Continental Shelf, [a] moratorium on offshore drilling, the closing of millions of acres [of] public lands for energy development, and the rise of [a] regulatory regime that openly favors expensive, intermittent energy sources over proven, affordable ones – all with taxpayer dollars.”
Under Republican administrations, crude oil prices are lower by $6 per barrel, which translates to 13 cents a gallon at the pump, according to a 2009 paper by Valerie Frey, an academic researcher at Yale University. The oil industry’s refining margins were also better under Republicans, even if consumers paid less, the study said.
Ms. Frey also found that retail gas prices did not decrease immediately before national elections.
A key factor, says Sabato, will be the price of gasoline in seven swing states: Colorado, Florida, Iowa, Nevada, New Hampshire, Ohio, and Virginia. He doesn’t rule out a move on the price front right before Nov. 6. “I wonder if Obama would release oil from the Strategic Petroleum Reserve [SPR] so it was timed just right to draw prices down before the election,” he says.
Last year, Obama released oil from the SPR when prices started to go up because of the unrest in Libya. That had a very short effect on energy prices.