High Gas Prices Hurting Obama

President Obama is suffering in the polls because of high gas prices, but is there really anything he can do about them?

Sometimes a President suffers politically for things that are completely within their control, such as an unpopular piece of legislation, a political mistake, or a foreign policy adventures gone bad. Sometimes, though, they suffer because of things that are, by and large, beyond their control and that’s precisely the situation that President Obama finds himself in now:

Soaring gasoline prices are biting into household incomes and nibbling at Americans’ fuel consumption — and support for President Obama, according to a Washington Post-ABC News poll.

About six in 10 respondents said they had cut back on driving because of rising fuel prices, and seven in 10 said that high pump prices are causing financial hardship.

Obama, like previous presidents in times of high oil prices, is taking a hit. Only 39 percent of those who call gas prices a “serious financial hardship” approve of the way he is doing his job, and 33 percent of them say he’s doing a good job on the economy.

The Energy Information Administration said Monday that gas prices climbed last week to $3.88 a gallon, up 81 cents since the start of the year. That is the highest pump price since August 2008, before the financial meltdown.

Evidence of motorists’ hardships is littering the roads. AAA says the number of motorists running out of gas has been surging. John Townsend, a spokesman for the automobile association, said that cash-strapped members “are pushing the envelope” and that emergency gas deliveries to stranded members jumped nationwide, including by 40 percent in the District.

That sort of hardship could slow Obama’s reelection campaign. The Post-ABC poll shows that 60 percent of independents who say they’ve been hit hard by surging gas prices also say they definitely won’t support Obama in his bid for reelection.

In a hypothetical matchup with former Massachusetts governor Mitt Romney, the top GOP performer in the Post-ABC poll, Romney wins by 24 points among the independents who have taken a severe financial hit because of gas prices, and the president is up 7 percentage points among other independents.

Of course, there’s not very much that President Obama can do in the short term to control gas prices. Dipping into the strategic petroleum reserve, as some have suggested, would have, at best, a temporary impact on the price of oil that may not even trickle down to the gasoline markets in time for consumers to notice it. Expanding oil drilling may help in the long term but is unlikely to have any significant immediate impact on the price of oil. Moreover, as a I noted last month, it’s becoming apparent that increased gasoline prices don’t lead to the kind of changes in consumer behavior that would have an impact on gas prices, at least not in the short term:

In 2008 when prices last spiked, motorists carpooled, households drove the more efficient of their cars when a choice was possible, and many people opted for public transportation. But the impact was slight.

Borenstein says the drop in consumption was 3 to 4 percentage points. “That’s a pretty small demand response when the price of gasoline nearly doubles,” he said. Moreover, he said, “this was happening in context of a giant recession, so there were income effects as well.”

Christopher Knittel, a professor of applied economics at the Massachusetts Institute of Technology, said that “consumers are less responsive today than in the past, especially when compared to the 1970s.” With the growth of families with two income earners and other social changes, motorists are less likely to regard their day-to-day driving as discretionary.

But, Knittel said, “if prices continue to be high, they start to change what cars they buy, and manufacturers start to change the cars they offer. So it really depends on the time frame.”

Knittel said that the increase in gasoline prices is partly a result of the recovering economy. “One of the reasons gas prices are high is that we are coming out of the recession,” he said. “So it’s sort of bittersweet. The economy is getting strong, but it’s hurting our pocketbook.”

Meanwhile, not surprisingly,Washington is playing politics with higher energy prices:

The Democrats, self-proclaimed champions of the little guy, are going after greedy speculators, conniving hedge fund operators, and other financial sharks determined to rob said little guy blind, so we’re told. Senator Richard Blumenthal (D-CT) has called for empaneling a federal grand jury to hurl subpoenas at the suits on Wall Street. Unfortunately, Blumenthal is treating a symptom and sending the patient home to die.

The Republicans, self-proclaimed champions of the little guy, are no better, with their strident pushing of drill-till-we-drop legislation that would do nothing to bring down gasoline prices in the short term and do a great deal to perpetuate America’s dangerous oil dependence in the long term. While Republicans like House Natural Resources Chairman Doc Hastings (R-WA) give lip service to diversifying America’s energy menu away from oil, their hearts are not in it, which suits the House of Saud to a tee.

A narrative that the drill-everywhere crowd is pushing is that if the federal government would just send the oil companies a “come on down” invitation to drill all oil fields under federal ownership, happy cheap gas days would be here again. Recently, Senator David Vitter (R-LA) went so far as to claim that 95 percent of U.S. fossil fuel resources are locked up from development.

An outlandish claim, to be sure, but here’s the salient issue that Vitter and the rest of the drill-everywheres do not dwell on – the faster we and the rest of the world deplete cheap-and-easy oil, the more quickly we will be forced to tap expensive-and-hard oil in ultra-deepwater and polar regions, and the low-grade stuff like kerogen, a wannabe oil colloquially called “oil shale” that is not economical today because of high capital and production costs.

Both parties make these arguments, of course, because they’re cheap and easy. In the coming weeks, Exxon and the other major oil companies will release their First Quarter earning reports and they’re likely to show record earnings. It will be easy and cheap for Democrats to attack these numbers, while obfuscating the fact that the profit margin of these companies is among the lowest in all classes of industry and that taxing those record earnings away accomplishes nothing at all.  For Republicans, it is cheap and easy to change “drill baby drill,” while ignoring the fact that going after most of America’s remaining energy reserves is not economically viable unless oil prices are high and that most of the factors influencing oil prices are completely beyond the control of the United States.

Oil prices are high for three main reasons ; (1) the worldwide economy has recovered from the 2007-08 financial crisis, (2) demand from China and India continues to increase, and (3) most of the world’s oil is in the most politically unstable part of the world. There’s very little that Congress or the President can do to change any of those  factors.  Expanding oil drilling will help, as will research into new forms of energy, but as my colleague Steven Taylor noted last week, there is no magic formula that will bring gas prices down:

Even if Obama was defeated in 2012, these policies writ large are unlikely to change.  One might recall, for example, that drilling in ANWR was blocked with a Republican in the White House.   Further, many of the offshore drilling bans are state-based (see, e.g., Florida and California).  Yes, Obama installed a moratorium on deep water drilling after the BP oil spill (a move likely, I would argue, by any occupant of the WH at the time).  However, to pretend that that moratorium is responsible for high oil prices is absurd on its face, regardless of what else one may think of the policy.  Indeed, despite the numbers cited in the piece, it should be noted that the current surge in prices did not take place in concert with the moratorium, but rather because of unrest in North Africa and the Middle East (and in the context of global economic recovery and therefore increased energy demands).

Of course, none of this matters in the political context and American voters are likely to hold the incumbent President to task for increased gas prices simply because of the extent to which they are making an already difficult economic situation worse. In the long run, though, as with many other things, there are no easy answers here and the situation isn’t made any better by the fact that our leaders refuse to deal with us like we’re adult. But, then, no President is ever going to tell the American public that they may just have to live with higher gas prices because they’ll get booted out of office.

FILED UNDER: Barack Obama, Economics and Business, Politicians, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. But, then, no President is ever going to tell the American public that they may just have to live with higher gas prices because they’ll get booted out of office.

    We tend to not be big fans of honesty, sadly.




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  2. john personna says:

    There is without a doubt a Libyan component to current gas prices.




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  3. JKB says:

    But given the human tendency to attribute market, natural or other changes to human traits, it doesn’t help that Obama, Sec. Salazar, Sec. Chu and adviser Browner, all called for higher gas prices during the campaign. So the Obama administration got what they wanted, higher gas prices. That they don’t like the complementary part, blame for higher gas prices is just to bad. That they have little control to reverse the higher prices is just to bad. They wanted it, they got it and they are going to get the credit, deserved or not.

    Look on the bright side, if Obama is able to convince the citizenry that the higher gas prices are not his fault, he’s learned a valuable lesson that might keep him from trying to artificially raise the gas prices as policy since then the blame will belong to him and his minions.




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  4. Patrick T. McGuire says:

    Each time there is any political instability in the Middle East, gas prices shoot up immediately because of anticipated threats to future supplies. If Obama wants gas prices to drop, all he needs to do is announce that he is removing all prohibitions from drilling in the US, that he is going to flood the market with relatively cheaper oil, and gas prices will drop like a lead balloon.




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  5. Hey Norm says:

    McGuire shows a basic lack of reality…but no matter. Listen to Trump…all you have to do is go to OPEC and tell them to drop their price. Done. Next problem.




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  6. Hey Norm says:

    It’s really too bad that when we first started talking about energy independence in the 70’s it was demogogued by, most likely, the climate deniers of today. Had we started working on this problem 40 years ago the most technologically advanced nation in the world probably would have made some progress by now. As it is we are stuck with people who think that drilling our meager oil reserves will flood the markets with cheap oil, and that the continued use of fossil fuels will do nothing to accelerate climate change. Both are demonstrably untrue. And both are driving our energy policies. You can’t make up how stupid it is.




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  7. Axel Edgren says:

    In any organization, people being rated and approved based on matters outside of their control is considered a dysfunction.

    If you are so childish you just lash out at the most obvious but largely irrelevant target, you are part of the problem and generally a stupid and weak fodder-person that deserves to be hurt financially.

    You spend several decades not planning for a future of more expensive gas and when the inevitable fluctuations happen, you blame the guy who is president at the time and cross your arms in a huff. What a bunch of degenerate scum.




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  8. john personna says:

    Higher gas prices are good, but it would be better if those higher prices were in some way paying down US debt, or helping close the roads funding gap.

    Other hand, if any of you own oil wells … you’re good.




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  9. JKB says:

    Axel, you’ve obviously never held a command position. You can survive things outside your control but often you can’t. And two years in, you own everything regardless of whether you had a hand in it or not.

    Hey Norm, we did start 40 years ago, we got most of our electricity production off oil and on to the domestically available coal and nuclear, then certain whiners started whining about that. As for the tilting at windmills, the wind doesn’t blow and the Sun doesn’t irradiate locations 24/7. Check back with me when wind or solar power is all that is used to produce wind or solar power equipment, then I’ll believe it is self-sustaining.

    BTW, Gia has new rights and her Flora community has filed a petition for increases in CO2 and in global warmth, plus they want subsidies to study ways to increase the solar irradiation of all locations on Earth.




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  10. Rick DeMent says:

    If Obama wants gas prices to drop, all he needs to do is announce that he is removing all prohibitions from drilling in the US, that he is going to flood the market with relatively cheaper oil, and gas prices will drop like a lead balloon.

    Spoken like someone who has absolutely no idea of what he is talking about. Geez a couple of years ago the Alaska pipeline broke and it took them three days to figure out where the problem was and how long it would take to fix it. In those three days oil prices actually went down a bit rather then going up demonstrating how little effect US output has on oil prices, besides, even if we could ramp up production all OPEC would have to do is reach over and twirl back the tap just a bit.




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  11. john personna says:

    Check back with me when wind or solar power is all that is used to produce wind or solar power equipment, then I’ll believe it is self-sustaining.

    Check back with me when all the various fossil fuel subsidies and waivers are removed, and then we’ll see if wind and solar are such bad deals.

    (Nuclear would fail if it were truly private and required private disaster insurance.)




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  12. john personna says:

    Spoken like someone who has absolutely no idea of what he is talking about.

    Not to mention, many drilling bans are state and local. My city has one. Obama can’t remove it.




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  13. Axel Edgren says:

    You can survive things outside your control but often you can’t. And two years in, you own everything regardless of whether you had a hand in it or not.

    If that’s how Americans think, their problems and malaise is of their own doing. Control over matters entail responsibility. Presidents don’t control oil prices.

    we got most of our electricity production off oil and on to the domestically available coal and nuclear

    Oh, if only republicans were willing to make coal cleaner, nuclear plants more safe and natural gas fracking less dangerous to society and nature.

    But no, those psychopaths cut funding for everything and care for nothing more than pampering the Galtian elites. Look at Wisconsin, where the Koch brothers demanded they get to pour toxic byproducts into a river and got the A-OK instantly. Or look at the lack of republicans demanding harsher regulation of oil drilling safety even after the Gulf spill. Republicans today are just corporatists. The commons, national parks, ecosystems – if the corporations think they are in the way, you republicans are always ready to remove legislation! Freedumb!

    Heh, the US could be letting the Holy Corporations drill everywhere and their precious gasoline would take long to become cheaper, and even then not by much. Not to mention the ecological costs. Sucks to be car-dependent.




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  14. ponce says:

    The Republicans lead over the Democrats in Rasmussen’s Generic Congressional Ballot is down to just 2 point, the lowest it’s been in over a year and a half:

    http://www.rasmussenreports.com/public_content/politics/mood_of_america/generic_congressional_ballot

    Perhaps the American public is aware that gas prices have risen 25% since Boner and the Republicans took over the House?




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  15. JKB says:

    jp, I wasn’t talking about cost, just show me the factory powered solely by wind and/or solar that is producing wind and/or solar power generating equipment. And just to be fair, we’ll set the production price at what it costs to produce the same equipment today in a conventionally powered factory.

    Sucks to be car-dependent.

    Not to the billion of people around the world who as soon as they are able purchase a car even before all other expenses. They purchase the freedom to go and do according to their own schedule and whims. Since Henry Ford made the car affordable for the non-wealthy that has been the action in every place around the world, as soon as the people became well off enough to afford a car, they bought a car. Want to guess why car sales are increasing in China, because people have been allowed to benefit from their labor and those benefits are being spent on the freedom to travel as the person decides. Not to mention, the dramatic increase in productivity by recovering all the time lost waiting for mass transit schedules and not taking the slow route to your destination.




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  16. Neil Hudelson says:

    We tend to not be big fans of honesty, sadly.


    This
    has always struck me as a great allegory for the American public.




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  17. William Teach says:

    Right, because Obama and the democrats have nothing to do with the policies which restrict drilling for oil on American soil and waters. Obama has no problem giving brazil money to drill, buy, getting our own? No way.

    Lord save us from wishy washy RINOs who are Obama apologists




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  18. Hey Norm says:

    Blackbeard shows his lack of reality. Drill you pirate, drill!!!




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  19. Axel Edgren says:

    Right, because Obama and the democrats have nothing to do with the policies which restrict drilling for oil on American soil and waters.

    You could drill everywhere you want if you were willing to ensure there would be measures to prevent another Gulf spill.

    Corporations are destroying mountains, poisoning lakes and commons and other destructive things. If you start making sure they act less rapaciously and casually, then it would be safe to let them drill for oil.

    Corporations are predators – they take whatever they can get away with and want everything they can get. That is OK, but we shouldn’t be naive and let them drill and frack all over US soil and hope for the best. More safety and ecological legislation must be in place first, and there must be harsh penalties for corporations that screw up.




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  20. ponce says:

    “Corporations are destroying mountains…”

    Plus it’s silly to believe that even if the federal government opened up all of America’s rather pitiful remaining oil deposits to drilling it would have much of an impact on the price of gas.

    It’s amazing how corporations can get get working class Republicans to unquestioningly spew their propaganda.




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  21. Will Collier tracks the price of crude oil isnrelation to presidential actions regarding drilling and extraction, “Thanks to Obama, Gas Jumps in a Flash.”

    The day corresponding to that [2008] peak, an all-time high of $145.16/barrel, was July 14, 2008. By some strange coincidence, that was the very same day then-President George W. Bush lifted, by executive order, a federal ban on offshore oil drilling. …

    By Friday, July 18, the price of a barrel of crude had dropped to $128.94, a 12% decrease. A month later, on August 14, the price had fallen to $115.05. …

    By election day, November 4, the price of a barrel of crude had plummeted to $70.84 — a 51% decrease in less than five months. …

    Obama had been president-elect for all of five days when he announced his intention to rescind Bush’s order. Oil prices started going up again in January of 2009 and steadily increasing ever since. Obama Energy Secretary Ken Salazar announced a highly restrictive offshore leasing policy last December, and the Bush executive order was officially reversed on February 8, 2011.

    The price of crude that day was $85.85. By April 19, it had risen to $107.18, with no end in sight.

    Now the sky is the limit: “Obama Calls For An End To Oil And Gas Tax Breaks Hours After Boehner Says They Need To Pay ‘Their Fair Share‘.” Just wait and see what happens to pump prices now. I am amazed at the number of people who do not understand that to a business, oil business of selling soap, corporate taxes are just a cost and are recuperated the same as any other cost. Taxes go up, sale price of the product goes up. In a consumer-market economy all taxes, of any kind whatever, are paid by the end user, the consumer.

    The idea that the president cannot affect oil and as prices is simply absurd. The market moves at least as much on perceptions as on fundamentals. And the perception today is, rightly, that Obama is going to live up to his campaign promise to shut down significant sectors of America’s energy economy.

    Mission accomplished!




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  22. Tsar Nicholas says:

    The one saving grace for Obama is that his core groups of supporters either are so old, so young or so idiotic, they’re not prone to own cars much less really to be affected by high gas prices.




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  23. ponce says:

    “The idea that the president cannot affect oil and as prices is simply absurd. ”

    Donald,

    Gas prices are up 25% since the Republicans took over the House in January.

    Clearly, something they did it to blame.




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  24. Hey Norm says:

    Will collier and pajamas media sees black helicopters…shocking.




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  25. john personna says:

    @JKB I’m really just saying that I don’t think the price cap is that large, but as long as it is there, and as long as society subsidizes things like coal (directly and indirectly by shielding liability) then we won’t see huge adoption.

    Of course, that Texas chooses wind is a pretty good vote in wind’s favor. It’s not like Massachusetts or traditionally liberal state choosing the “green” option.




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  26. john personna says:

    “gap” not “cap”




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  27. anjin-san says:

    Of course, there’s not very much that President Obama can do in the short term to control gas prices.

    Well, if he was a Republican, he could dish out some multi-billion dollar tax breaks to the oil companies. Would not help with gas prices, but it would keep the boss happy.




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  28. Pete says:

    Oil is up because the dollar is tanking; period.




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  29. john personna says:

    @Pete, the problem with that explanation, in short form, is that it ignores so many facts on the ground.

    Now, if you say OECD countries are all inflating their currencies and all facing high commodity prices as a result … that is a bit more defensible … but I think it also falls apart as a sole explanation.

    It’s too much to ask that we believe that is the universal explanation.

    And there are other obvious factors: Emerging markets demand. Wars. Speculation.




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  30. Joan says:

    Prices need to go down not up on gas and food http://hubpages.com/hub/High-Food-and-Gasoline-Prices plus around the home http://hubpages.com/hub/Home-TipsforHousehold




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