Debating Rising Gas Prices, the Economy and Elections…a Little More
Last night, my Democratic colleague Jennifer Wagner discussed the rising cost of gas and how it might effect the presidential election.
A few of the comments I have received after the segment aired was that gas prices will have a very little effect on the race despite the fact that prices could rise to $5 or $6 a gallon over the summer…and in some cases has already arrived. The main talking points are that it’s all economy and jobs and this true. But it can not and should not be lost on the voter how high gas prices could have a highly negative domino effect on the economy and jobs.
There are a few things to consider first. Gas prices have risen in some parts of the country by 90% during the Obama Administration. From Fox 43 in the swing state of Pennsylvania:
Just to give you an idea how much gas prices have risen, when President Obama was inaugurated in January of 2009, the average price of gas was $1.84. That average price now stands at $3.52, a 90 percent increase. Experts say the prices could go high in the early spring and keep rising throughout the summer.
This is not what drivers are looking to see, especially during the month of February. Gas prices are at record highs for this time of year and those prices only expected to rise.
As I write this post, the average cost of gas in the Indianapolis area is $3.67 with a high of $4.01 at, of all places, Costco.
Secondly, gas prices have a tremendous effect on our day to day lives. The more you spend on gas, the less you spend on groceries and other essential items. But here’s the rub on that. The more places like Marsh, Kroger, Costco, Sams Club, Wal-Mart, Meijer, ect. have to spend on gas shipping food and other products to their stores, the more the price of goods go up. The more the price of goods go up, the less you’re spending on those good. The less you spend, the less businesses (mostly small mind you) make. The less they make, the fewer people they can afford to keep employed. The fewer people employed, the larger the unemployment number becomes and that so-called economic turnaround starts an unfortunate tailspin, the likes we could already be starting to see. A recent survey by Gallup shows that unemployment has ticked back up to 9 percent.
Third, Democrats will argue that President Obama has done all he can to help move us away from foreign oil and energy dependence. Really? I’ll give you three examples of what he’s done:
- Passing on the Keystone XL Pipeline
- Closing off drilling in the ANWR
- Closing off drilling off the continental shelf
- Closing off coast line
He even recently failed to secure imports from Brazil who would rather import to China. All this is not to say that domestic oil production hasn’t occurred in here in the states. Via the Wall Street Journal:
As for domestic energy, Mr. Obama rightly points to the rising share of U.S. oil consumption now produced at home. But this trend began in the late Bush Administration, which opened up large new areas on and offshore for oil and gas drilling that are now coming on stream. Mr. Obama sneered at expanded drilling as a candidate in 2008 and for most of his term has done little to expand it.
In early 2010, he proposed to open some new areas to drilling but shut that down after the Gulf oil spill. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven. Over the same three months, the feds approved an average of 4.7 shallow-water permits a month, compared to the historical average of 14.7.
Approval of an offshore drilling plan now takes 92 days, 31 more than the historical average. And so far in 2012, an average of 23% of all drilling plans have been approved, compared to the average of 73.4%.
The reality is that most of the increase in U.S. oil and gas production has come despite the Obama Administration. It is flowing from the shale boom, which is the result of private technological advances and investment. Mr. Obama has seen the energy sun rise and is crowing like a rooster that he made it happen.
While the President rightly says there is no silver bullet to high gas prices, there certainly are ways he could have taken proactive steps domestically to address our current needs while providing pathways for an “All the Above” approach to energy independence.
But what does all this have to do with the economy, jobs and the election? Outside of what I explained above,
the AP and one of the President’s Democratic colleagues chimes in:
While motorists are already starting to complain, many economists see the $4-a-gallon mark as a breaking point above which the economy starts to suffer real pain. Analysts estimate that every one-cent increase is roughly a $1.4 billon drain on the economy.
And this from Congressman Ed Markey of Massachusetts:
“Rising gas prices could be the difference between an economy that continues to recover and an economy that sinks back into recession.”
The simple fact is, gas prices are at a high point for this time of year. Gas approaching $4 a gallon in February is something that should have the President sweating like it’s a 90 degree summer day in humid Washington, D.C. And honestly, I’ve just scratched the surface.
But don’t just take my word for it. Check out respected political analyst Doug Schoen’s point of view: