Pain at the pump: Not good for Obama

The price of gas has gone nothing but up over the last month; fifty cents per gallon, or ten percent, over the last year.

Modest economic growth, nixing the Keystone Pipeline and Iran’s continued saber-rattling over its desire to have the bomb all have one thing in common: More pain at the gas pump.  And that’s one more headache for Obama’s re-election.

If we connect gas prices with elections, it tells us a lot.  However, it’s not enough to look at nominal gas prices (you have to equalize for inflation so past gas prices paid at the pump are displayed in today’s dollars).  Fortunately, Uncle Sam helps us out with a nice website that does the work for us.  See http://www.eia.gov/forecasts/steo/realprices/

So what does all this tell us?

Barring a plunge in gas prices, President Obama is in real trouble.  There is a huge difference between gas prices in “status quo” years when the party in power maintained the White House or suffered only minor mid-term election losses and “change” years when the White House was lost or there were significant mid-term losses.

How big is that difference?  When analyzing the prices of a gallon of gas between 1976 and today, we find that the average paid at the pump for a gallon of regular gasoline was $1.98 in a “status quo” year compared to $2.43 paid in a change year (as measured the October prior to election day).  That’s a 23{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222}  difference in price and enough for Americans to either reward or punish their elected officials.

The average February price for a gallon of gas was $3.47 – President Obama’s gas currently costs nearly a dollar more than previous losing incumbents.  Remember, all these numbers are normalized for inflation; Uncle Sam’s web site converts everything to today’s shrunken greenback.

Low gas prices fuel the re-elect of incumbents.  In 1988, when George Herbert Walker Bush won a third term for Ronald Reagan, gas prices were $1.75.  Bill Clinton cruised to re-election over Bob Dole.  Gas prices?   A measly $1.41 paid just prior to election day in October,1996.

Just as low gas prices can juice a presidential re-elect, the data also show that high gas prices can spell doom for presidential re-elections.  A couple of examples (all in today’s dollars):

•    In 1976, Jimmy Carter beat Gerald Ford in a change year, drivers paid $2.48 for a gallon of gas in October, $0.05 cents above the “change” year average.

•    When Ronald Reagan beat Jimmy Carter in 1980, a gallon of gas in October cost $3.36, or $0.93 cents over the “change” year average.

•    In 2008, Republicans lost the White House and Barack Obama was the first Democrat since LBJ to break 50{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222}… riding $3.92 October gas prices, a whopping $1.50 above the average “change” year price.

It works in mid-terms too.  In 1998, the price paid at the pump in October was $1.41. Clinton was holding the White House, and only one Democratic incumbent was defeated (Mark Green beat Wisconsin’s Jay Johnson).  When Democrats swept both houses of Congress in 2006, many blamed it on the Iraq war.  But, gas prices were solidly in the “change” zone: drivers paying $2.53 per gallon.  When Republicans crushed the Democrats in the 2010 mid-term elections, gas prices were $2.88 prior to election day.  Ouch.

It deserves repeating: At $3.47 for a gallon of regular, current gas prices are more than a dollar over the average loser.

A dynamic that doesn’t bode well for President Obama.