Obama’s Reelection Chances Threatened by $5 Gas

Pump Pain

Gas prices are going up again.

According to an article in the LA Times, petroleum analysts say that gas could reach $5 per gallon in big cities by Memorial Day 2012. At the very least, the cost of fuel could top $4 by spring of this year. An unstable political situation in the Middle East (Read: Syria and Iran) is partially to blame for the higher projections, but a growing pinch on US refineries (we haven’t built a new one in decades) is also responsible.

If gas does manage to hit the $5 or even $4 mark it would be politically terrible news for President Obama. Obama needs a strong economic recovery to justify his reelection, and has been polling better as of late due to improving economic indicators. A spike in gas prices could throw the recovery off track, or give consumers a sense that things are not getting any better. Either outcome would be bad for a president who took office when gas cost only $1.87 (Yes, you read that right. The average cost of gas when Obama took office was $1.87)

A spike in gas prices would also be bad for Rick Santorum – and gold for Mitt Romney. Santorum is the social issues candidate in the GOP field, and as the economy becomes less of an issue he’ll gain ground. Romney, on the other hand, has run his campaign on a promise of a return to economic prosperity. Increasing gas prices would make the recovery look even weaker than it already is, playing to Mitt’s advantage.

Obama could always pull the “share the wealth card” and argue that oil companies should accept smaller margins to help consumers, but that argument probably won’t hold water with an angry electorate looking to collect.

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9 comments on “Obama’s Reelection Chances Threatened by $5 Gas
  1. Alex Panos says:

    Nice job on the blog! I have a different angle on this one for you. Obama’s dilemma – the high energy prices are intentional. One of the democrat party’s goals is higher energy costs, because it is the only way “clean energy” is cost competitive. But, if cost go too high people will revolt and turn on you. This Obama’s dilemma because he intentionally implemented policies to increase fuel costs.

    • This is a good observation. Many economists believe that, at least for the time being, alternative energy will only be cost effective (and thus implementable) with higher conventional energy prices. It would be interesting to see a chart showing the prevalence of alternative energy sources vs the cost of conventional fuels, though the timescale might be such that no relationship can be discerned.

      But back to your original point. While I think Obama needs high fuel prices to make alternative forms of energy usable, I’m just not sure he would want a price spike until after he is reelected. I say this because I think it would lose him more votes than it would give him. The Obama team is likely looking at how a price increase effects his election chances. Looking at their conclusions would be interesting, and very helpful to his Republican opponent as well.

    • And thanks, by the way 🙂

      Feel free to continue to comment and to subscribe by email if you want.

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  6. Tom Z says:

    This is an old post, but I saw your link in a newer post and I had to comment.
    1) Good point on the price change, but you’re comparing a maximum of $4-5 gas to the average of $1.87… I know that down here, I bought gas on Memorial Day for $3.109. Which is still more, granted, but not as much more as $5 is. Which brings me to my next point:
    2) At the start of Bush’s second term, gas was also averaging near $1.86. When Obama was campaigning (Summer 2008 – 4 years before now-ish), gas was again at $4.12 on average. Come fall 2008, gas started dropping. By the turn of the year, it was at the level you cite- about $1.60-1.80 per gallon, average. Unfortunately, I was not driving at the time, so I don’t have data on my personal fuel purchases, so I’ll just link you to my source here, pending my retrieval of data from my parents car/gas logs:

    • The fall in gas prices was related to a lot of things, including a decrease in demand due to a weak economy, overproduction, etc. Now as countries begin to consume more gas again (especially growing countries like China and India and Brazil and so on), the demand has begun to increase. Unfortunately, the market is struggling to compensate for that increase because oil regulations make it less flexible and responsive to demand. The Keystone pipeline is one example where excessive regulation has halted the flow of oil. Add to this the fact that we haven’t built a new refinery in decades, and we can see why gas prices are going up. By authorizing new refineries and reducing regulations (including allowing the pipeline to be built), the president can alleviate these problems. The fact that he hasn’t taken them is a failure of his administration, and that’s the heart of my criticism.

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