Higher gasoline prices could stall recovery, Obama's re-election

06:00 PM
Feb 21
2012
Higher gasoline prices could stall recovery, Obama's re-election

A winter of good economic news for the White House may soon give way to the click, click, click of higher gasoline prices, experts said, threatening the recovery -- and perhaps President Barack Obama's chances for re-election.

By summer, some analysts said, you could be paying $4 for a gallon of gas, almost as high as the record set in the summer of 2008. A price that high could cripple the still-fragile recovery, as millions of Americans might decide to spend their just-renewed payroll tax cut on gas instead of a new clothes dryer or TV set.

We're always over-sensitive to the price of gasoline," said Chris Kuehl, a Kansas City-based economist and business forecaster. "It just provokes consumers into total depression if the price goes up. It's just psychological."

The average price for a gallon of regular gas in the Midwest was $3.41 last week, up 32 cents from a year ago and $1.59 more than the day Obama became president. The price of a barrel of crude hit $105 Monday in some overseas markets, the highest in the last nine months, largely because of Iran's decision to curtail oil supplies as a response to sanctions imposed to pressure the country into abandoning its nuclear ambitions.

Average retail gasoline prices in Ohio rose 12.5 cents per gallon in the past week, averaging $3.44 per gallon. This national average was $3.51 on Sunday, according to gasoline price website OhioGasPrices.com.

Prices are 36.3 cents per gallon higher than the same day one year ago and are 8.6 cents per gallon higher than a month ago. The national average has increased 17.1 cents per gallon during the last month and stands 35 cents per gallon higher than this day one year ago.

"Gasoline prices have perked up a bit in the last week," GasBuddy.com senior petroleum analyst Patrick DeHaan said. "As we continue to move towards warmer weather, gasoline prices will follow -- with prices accelerating higher at a faster pace come late March into April.

"So if motorists think this is bad, they should really hold on to their chairs," DeHaan added.

In Los Angeles, the price of regular unleaded already is $4.93 a gallon and premium $5.09 at some gas stations, and the escalating fuel costs are expected to ripple throughout the economy, affecting everything from groceries to air fares.

While economists, energy analysts, and consumers kept a close eye on rising fuel prices, politicians are paying attention, too.

Obama's approval ratings have steadily climbed since the debt-ceiling debacle last year, reaching 47 percent last week according to the Gallup poll, the highest they've been since June 2011.

But gasoline sticker shock could change that trend, many Republicans believe. House Speaker John Boehner reportedly has urged GOP House members to make gas prices an issue on the campaign trail this fall.

Republican presidential candidates Rick Santorum, Mitt Romney, and Newt Gingrich also have moved gas prices to prominent positions in their stump speeches. Gingrich in particular has made fuel prices a campaign theme, launching a Facebook petition drive aimed at $2.50 a gallon gas, while bitterly criticizing the administration at every campaign stop.

"Stop bowing. Start drilling," the Gingrich website proclaims.

Santorum also has made the price of gas an issue. "This president systematically is doing everything he can to raise the price of energy in this country," he said over the weekend.

Robert Dewhirst, a political science professor at Northwest Missouri State University, said the attacks are predictable. Gasoline prices are among the most important issues for any presidential candidate, he said, because they become a campaign commercial every time the tank is filled.

"It's up close and personal," Dewhirst said. "It's something everyone can figure out when they go the pump: How angry can you get. And we have a history of taking that out on the president."

Sensing that reality, many Republicans have concentrated their criticism on the White House's energy record, especially its opposition to a new oil pipeline from Canada known as Keystone XL.

"Higher gas prices are a direct hit on the bottom line of every American household and will further slow the economic recovery," said U.S. Rep. Kevin Yoder, a Kansas Republican and House freshman.

But they've also said higher prices should prompt more drilling in the Gulf of Mexico and the Arctic National Wildlife Preserve in Alaska.

"Republicans believe that we should use our own natural resources and create thousands of good-paying American jobs," U.S. Rep. Sam Graves, a Missouri Republican, said in an email. "The president is going to have a hard time convincing Americans paying $4 or $5 a gallon for gas that his plan makes sense."

The administration is doing its best to push back.

"There's no silver bullet in dealing with global oil prices," White House spokesman Jay Carney said a week ago. "That's why (Obama) pursues an 'all of the above' agenda when it comes to reducing our dependence on foreign oil, increasing domestic production of oil and gas, increasing our investments in clean energy."

Democrats also may take another crack at ending some tax preferences for oil companies, which they pursued last year as gas prices crept up. And they'll argue for focusing on alternatives to fossil fuels.

"(Sen. Claire McCaskill) believes there must be a focus on reforms that get alternatives out to the energy market faster, rather than near-sighted proposals that prolong our addiction to oil," according to a statement on the Missouri Democrat's website.

But McCaskill -- sensing a potential issue in her tough re-election campaign -- also has generally supported the Keystone pipeline in recent public statements.

There is another potential short-term answer to higher gas prices: Releasing oil from the Strategic Petroleum Reserve. That action, combined with a lowering of tensions with Iran, could help stabilize prices, Kuehl said, potentially reducing the political and economic damage from high fuel prices.

"If he did something with the reserve now, that would have an impact on world markets and would be considered appropriate," he said. "Dumping the reserve now would be seen as countering what the Iranians are doing."

There also is a chance gas prices will come down on their own. A still-weak economy will reduce demand, some experts said, while the oil supply remains relatively high. Any major developments in the Middle East could, of course, change that outlook.

Congress and the White House may also discuss a temporary reduction in the federal gasoline tax of 18.4 cents per gallon. In 2008, when the average price hit $4.05 a gallon, presidential candidates John McCain and Hillary Rodham Clinton called for a temporary halt on the federal levy.

A key opponent of the idea? Then-candidate Barack Obama, who called a gas tax holiday a "gimmick."

___

By Dave Helling - McClatchy Newspapers (MCT)

(c)2012 The Kansas City Star (Kansas City, Mo.)

Visit The Kansas City Star (Kansas City, Mo.) at www.kansascity.com

Distributed by MCT Information Services

 

 

Comments

Share your thoughts and opinions with your community. All comments on our site are governed by our Discussion Guidelines. You must have a valid account to post comments.

Feb 27, 2012
08:51 AM

YRUHere says

A little research may show what is happening in the GLOBAL oil markets. It has nothing to do with what most people think. Gasoline is refined crude oil. Crude oil is a globally traded commodity. This commodity is currently affected by what is known as contango and other factors. There is currently a worldwide surplus of crude oil. But, in the US, there is currently a shortage of refined gasoline because several large refineries have gone offline and other reasons. The market will correct itself soon, IMO, barring any unforeseen natural disaster or a future clog in the current supply chain of crude.
Feb 25, 2012
01:28 PM

redskiesatnight says

i blame geo bush
Feb 25, 2012
11:55 AM

6079 Smith W says

North Alaska may hold 80 trillion cubic feet of nat gas and another 2 billion barrels of oil:

http://www.bloomberg.com/news/2012-02-24/n-alaska-may-hold-80t-cubic-fee...

Drill, drill, drill, jobs, jobs, jobs. Are you listening Mr. Obama???

More than likely, there's still oil and some nat gas left in Huron Co. The county sure could use the tax reveune and a job or two.

Feb 25, 2012
11:48 AM

6079 Smith W says

@ rogerthat:

Way off topic but: No investors (billionaire or not) = no capital for business investment = no jobs.

Better check the Huron Co. 2010 census info again. The major employers are mostly taxpayer funded public entities (see pg. 5, lower right) - not a good sign for future economic growth.

http://development.ohio.gov/research/files/s0/Huron.pdf

Feb 24, 2012
01:25 PM

Bellevue Dad says

Let's see... Gasoline will be over $5 a gallon this summer; the national debt has been blown apart by Obama's Reinvestment Program which did little to restart the economy and all of the "haters" on this website are still busy blaming President Bush. Are we any better off now than we were 4 years ago? Where is the change we were promised under Obama? The only change I've seen is my paycheck has been "changed" from dollars to change. Maybe it's time to throw all of them out and start over.
Feb 24, 2012
01:27 PM

rogerthat says

So apparently you prefer our money spent overseas?
Feb 25, 2012
12:04 PM

Robert Banks says

Afghanistan is overseas. So apparently you do prefer our money being spent overseas.
Feb 26, 2012
03:40 AM

rogerthat says

Exactly. We shouldn't be spending a dime over there.
Feb 23, 2012
10:36 PM

propman says

Obama sinks 500 million into Solyndra and more into other FAILURES like it at the same time he shuts down areas Bush opened for drilling. Then he blocks the new pipeline from Canada claiming there was not enough time to study the enviromental impact. The study was already done and they spent 3 years on it and had every agency aproval needed before he blocked it for purely "political" reasons. I remember president Carter and at least he was doing what he thought was good for the nation(was very wrong but...) Obama is doing whatever he has to CHANGE THIS NATION INTO WHAT HE WANTS IT TO BE!!!!! We will not like that Nation should he succeed.
Feb 24, 2012
04:12 AM

rogerthat says

Look it up: 350% more domestic drilling under Obama than Bush. Pipeline is a very bad idea. Might produce some temporary jobs but will present a lifetime of problems. Someone out there is spreading a lot of untrue stories. I'm not a fan but the fact that Obama's opponents are constantly lying is not a good sign about them. If they can't attack his real record they just make things up.
Feb 25, 2012
12:23 PM

Robert Banks says

Total domestic oil output is up 9% after declining under President Bush. Its more to do with rigs that couldn't turn a profit at $50 a barrel are able to make a profit now for the crooks Obama works for. The Democrats have the best there is now.....They don't get any better.....
Feb 25, 2012
12:44 PM

6079 Smith W says

@ Robert Banks:

Abundance of oil is squat without refineries turning it into gasoline. Refineries are the thin straw in the process.

Also, gas usage among American consumers is at a 15 yr. low.

Lastly, the East coast gets most of their crude by tankers, the price of Brent ($125/bbl) affects them more while other parts of the country are more influenced by the West Texas Intermediate price ($109/bbl).

No easy answers to problem; but there sure are a whole lotta wrongheaded rumors and theories.

One bright spot: The price of nat gas is near historic lows. It costs less to heat many of our homes.

Feb 24, 2012
10:07 AM

hit the road jack says

Almost all of the drilling you speak of is on private property,not gov. property, gov. really cannot do much about this,so they shouldn't try to take any credit for it either. how about the intelligent decision to split profits on gulf oil well with mexico,pretty intelligent isn't it.
Feb 24, 2012
10:13 AM

6079 Smith W says

@ hit the road jack: Did you know that almost 50% of the land area west of the Mississippi is owned by the Federal govt.?

IMO, sell off some and pay down the @#$% debt!

http://bigthink.com/ideas/21343

Feb 24, 2012
11:33 AM

Kottage Kat says

@ Mr. Smith, Silly you, that makes sense and is way to easy. Not gonna happen. Kat
Feb 24, 2012
09:17 AM

6079 Smith W says

@ rogerthat:

One of the major reason that there's more drilling? Fracking. A technique that the Employment Prevention Agency (EPA) and others would like to curtail.

$10 billion spend on Obama's green energy schemes and a few thousand jobs? That is crazy!

http://online.wsj.com/article/SB1000142405297020371070457705041249471317...

Feb 24, 2012
07:46 AM

propman says

Even Obama runs away from his real record. How many permits for drilling has the Obama administration approved since he took office? The increase that has happened was produced from the permits that Bush's administration approved. I'm tired of paying higher prices for gas and every other thing we use every day due to the regulations, higher taxes, over printing of money and new programs that have exploded in the last 3 years.
Feb 23, 2012
11:26 PM

hit the road jack says

Don't forget the 5 power plants he's closing weekly,costing us more money to utility companies.
Feb 24, 2012
04:38 AM

rogerthat says

Closing power plants that are losing money and damaging the environment is a bad thing? This should probably go in the plus column.
Feb 24, 2012
09:50 AM

hit the road jack says

Its not them that are losing money its US! have you ever seen a utility that lost money? hell no! they just raise their rates,but they don't raise rates like we have ever had under any other regime,this go green thing is for lunitics like you,if you want your utility bill to go up 400% thats fine,we can take care of that,but leave me out of your fantasyland dreams.
Feb 24, 2012
01:26 PM

rogerthat says

Your utility bill is going up regardless, the money losing plants cost the customers money you know.
Feb 28, 2012
09:16 PM

hit the road jack says

They wouldn't be losing money as bad if your fearless leader wouldn't put such epa rules that are nearly impossible to meet.
Feb 25, 2012
12:08 PM

Robert Banks says

The money losing plants you mention are coal-fired plants that have so many restrictions its cost effective to close them.
Feb 23, 2012
12:00 PM

6079 Smith W says

Remember the words of our current Dept. of Energy Sec'y Steven Chu in Sept. 2008:

"Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,"

Feb 23, 2012
09:06 AM

arnmcrmn says

Everyone forgets that Obama was on record several times stating that he thinks $5.00 for a gallon of gas is ok.
Feb 22, 2012
08:27 PM

kURTje says

re sorccerer======seems like the N.R. juggles comments from time to time for thier agenda? See; why not just post M as they come in instead of re-arranging them?
Feb 23, 2012
10:37 PM

propman says

because the newer commentor is REPLYING to another commentor such as I'm doing to your's
Feb 22, 2012
05:16 PM

jack langhals says

Well I guess we know who you are.Good dialogue though.This is good,you have to discuss these issues.This seems to be the only place to do it.Do we have a chat room?
Feb 22, 2012
04:50 PM

Marcus M says

From the Media & Business Institute; Rising gas prices used to be big news, but not so these days. Although the national average climbed to $3.56 on Feb. 20, setting a February record after going up nearly a month straight, there was far less coverage than in 2008. Broadcast networks repeatedly covered the rise under the Bush presidency. Gas prices bounced around eventually reaching $3.56-a-gallon on April 24, 2008. The Business and Media Institute analyzed broadcast network news references to gas or fuel prices between Jan. 20 and Feb. 20, 2012 and from March 24 and April 24, 2008. BMI found that in the 2008 period there were more than 4 times as many gas prices stories, news briefs or news headlines on ABC, CBS and NBC as there were in 2012 (97 to 21). Coverage during the time periods differed not only in quantity, but in tone as well. During Bush’s tenure, gas prices were a huge economic threat and cause of suffering. The networks also used the high gas prices to attack the administration. In 2012, the networks aired mostly matter-of-fact stories on the rising gas prices, and worried primarily that they would hinder the economic recovery, not that they are making people suffer. Dismal broadcast network reports about “skyrocketing” gas prices filled the newscasts in 2008. There were reports about businesses closing, airlines struggling and truckers protesting -- all because of the high prices. One ABC report said families were facing the “tough choice” between food or fuel. Others said that “wallets were running on empty” and consumers were told over and over that there was no relief in sight. But by the end of November 2008, prices had collapsed to $1.82. The networks weren’t simply reporting the painfully high gas prices in early 2008 though, in many cases they were exaggerating them. NBC’s “Today” focused on Redwood City, Calif. on March 6 where regular gasoline cost $3.99, according to the photograph NBC aired. The national average for gas that day was $3.19 a gallon. Ann Curry also failed to tell viewers that California has the highest state gasoline tax in the nation, a whopping 45.5 cents a gallon at that time. On gasoline specifically, reporters have routinely showed photos of extreme pump prices despite lower national averages. The Business and Media Institute documented this trend in 2007, 2006 and 2005. But now, in 2012, gas prices stories are very different. “[W]e’re seeing gas prices creep up every single week,” said one ABC reporter after delivering a positive economic report about the Dow Jones Industrial Average closing in on 13,000 for the first time since 2008. One CBS story just pointed out that if certain steps are taking against Iran, gas prices everywhere could move sharply higher. Although the time periods BMI analyzed were the same length and ended with the same national average price for gasoline, due to price fluctuations they were not identical. In 2008, prices rose from $3.26 to $3.56 in the month we examined. In 2012, prices were already higher ($3.38 on Jan. 20 Yet another example of liberal agenda and defend obozo at any cost including the truth.....
Feb 22, 2012
04:40 PM

jack langhals says

You mean there are people that would actually re elect this Bozo,even if gas was at $1.00 a gallon.He has trampled on everything this countrie's men and women have died for,from the constitution,to religious rights,aligned himself with the Muslim World and gave stimulus monies to failed companies.He says he doesn't put his hand over his heart because he don't want to take sides.he better take sides, he is the President of The United States.The one time he did put his hand over his heart,it was the wrong one!He even canceled a Religious Day on the White House Lawn but held a Muslim Day.He even makes Jimmy Carter look like a real president!Now this is being kind!He won't take action against the Iranian issue until the first missile lands in Israel.They will have to take out reactors and i hope they do.
Feb 23, 2012
08:09 AM

Cliff Cannon says

@ Mr.Langhals : " he says he doesn't put his hand over his heart because he doesn't want to take sides.He better take sides,he is the President of the Undited States" Incredibly well put.The American people deserve so much better.

Feb 22, 2012
12:25 PM

mister wizard says

@kURTje - Becuz they're Brilliant ! What ?
Feb 22, 2012
11:43 AM

Seriously_Local says

Anyone else tired of getting the entire wire stories but a simply paragraph that says "buy our paper to read the entire story" for local stories? Seriously, how lame is this site?
Feb 22, 2012
02:13 PM

6079 Smith W says

@ Kabin Kitty: Quit whining and buy a subscription. Or if you're really cheap, visit the Library.
Feb 22, 2012
10:14 AM

MiddleRight says

Well, when you shut down all drilling in the gulf and then nix your non-terrorist neighbor to the North on a pipeline deal, what do you expect gas prices to do? All you union guys who love BO, how many jobs has he cost you in just these two issues alone? Now the EPA is forcing electricity companies to close plants because it's too costly to adhere to their standards. Your rates will be going up shortly. Soon it will be the 1800's again in this country where we walk everywhere and go to sleep at sundown becuase there is no electricity. Only the RICH will be able to afford these luxuries. I thought BO was for the poor and middle class though?
Feb 22, 2012
02:20 PM

rogerthat says

Drilling and "the pipeline" only aid the already rich.
Feb 22, 2012
02:22 PM

6079 Smith W says

@ rogerthat: Do you have any retirement investments? If so, chances are you own "Big Oil."

http://www.consumerenergyreport.com/2007/09/18/who-owns-big-oil/

Feb 22, 2012
04:54 PM

jack langhals says

Smiitty,he obviously doesn't understand where jobs come from and who provides them.
Feb 24, 2012
04:20 AM

rogerthat says

Well, the "job creators" already have their tax breaks and subsidies so where are the jobs? Show me some billionaires who have provided jobs in Huron County, besides the low salary, low benefit WalMart jobs that cause the loss of better jobs. There are a lot of job providers in the county and they are not the wealthiest .01% that you and Smitty support.
Feb 24, 2012
09:28 AM

6079 Smith W says

@ rogerthat: Why should anyone invest capital in Huron Co.? What would they produce?
Feb 25, 2012
03:32 AM

rogerthat says

There are thousands of people working in Huron County whose jobs were not provided by billionaires, OK? Some of us make a pretty good living without the government's help via tax breaks and subsidies.
Feb 22, 2012
12:50 PM

FST says

Obama is only one person and has had to fight a very wealthy Congress that is only for the wealthy. How do you think he can get things done?
Feb 23, 2012
09:03 AM

arnmcrmn says

Wait....you do realize the the ENTIRE WHITE HOUSE was run by the Dems up till this most current election.
Feb 22, 2012
04:46 PM

jack langhals says

What more could he possibly want done?He stopped the pipe line,Gulf Drilling,he has taken over the schools,forced Obamacare down our throats,cut medicare 570 billion dollars.I am surprised there are doctors even take care of Medicare Patients.Name me one good thing he wants done or did!
Feb 22, 2012
09:50 AM

6079 Smith W says

@ rogerthat: Supply and demand. If the economy slows, the price of oil will retreat.

A request for a federal debt ceiling of $16.394 trillion and placing more financial burden on every single American makes Mr. Obama the worst POTUS ever.

Feb 22, 2012
02:18 PM

rogerthat says

Short memory, Smitty. Where did the debt come from?
Feb 22, 2012
05:10 PM

jack langhals says

During the Bush Adm he added 5 trillion to the debt.In the first 19 months 2.5 trillion more was added by this adm.Now what the final debt added , is yet to be determined.Now if the next bunch continue being this stupid,where will it end.You can go on the internet and read all the wasted millions,like studying why pig shxt stinks, but all the nut cases in congress don't have guts enough to kill anything in their districts for fear of their jobs.They did a study years ago how much we could save doing away with the paper dollar.Well one of those worthless Kennedys stopped it because the paper company was in Mass.
Feb 22, 2012
02:47 PM

6079 Smith W says

@ rogerthat: Mostly entitlement spending. Why, where do you think it comes from?

http://www.federalbudget.com/

"Short memory" is just one of your 'issues'. :)

Feb 22, 2012
04:48 PM

jack langhals says

What entitlements do you refer too?
Feb 23, 2012
09:54 AM

6079 Smith W says

@ jack langhals: Entitlements: SS, Medicare, Medicaid, etc.

http://en.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_b...

With the advent of the boomers and based on their spending trajectory, "entitlements" will eventually consume the entire fed budget.

Would it bother you if Saturday mail delivery ended?

Yes
26% (40 votes)
No
70% (109 votes)
Not sure
3% (4 votes)
Other (and I'll share my thoughts in the comments below)
2% (3 votes)
Total votes: 156