Free Markets, Free People

Gas prices, economics and politics

Gallup tells us that economic confidence has slumped sharply in the past two week due mainly to the spike in gas prices driven by the unrest in the Middle East and North Africa.


Funny how that works, no?  Gas prices go up, economic confidence goes down.  And the rest of that goes “economic confidence goes down, incumbents suffer”.

So you’d think smart politicians would want to ensure that they’ve done everything they could to ensure gasoline prices remain as low as possible.

You’d think.   But that’s not exactly what has happened here, is it?  We’re now in the 10th month of a drilling moratorium imposed by this administration, so there’s really no immediate or impending increases in production domestically that could help ease this, is there?

Says Gallup:

The slump in confidence is likely tied to gas prices, which have risen sharply amid growing political instability in the Middle East, most notably in Libya. The U.S. Department of Energy reported an increase in gas prices from an average $3.14 per gallon nationwide during the week ending Feb. 14 to $3.38 this past week. In addition, news media focus on the challenges governments are having in passing budgets may also affect Americans’ perceptions of the economy.

Gallup’s Economic Confidence Index comprises two measures — one assessing consumers’ views of current economic conditions and another measuring their perceptions of whether the economy is getting better or worse. Both components are more negative than they were two weeks ago, but most of the change has come from increasingly pessimistic expectations about the economy’s direction.

The pessimism is being driven by the understanding that we haven’t the means to effect the problem nor have we done anything in the interim to improve our ability to effect the problem.  In other words, we’re more at the mercy of foreign oil now than we were when this administration took office.

Secretary Salazar has been on a vendetta against oil, using the unusual but certainly horrific accident on the Deep Horizon platform, to effectively shut down a critical portion of the domestic oil industry.  It has cost thousands of jobs and billions of dollars (not only to the industry but to the government in the form of royalties and taxes).   Rigs which were scheduled to be deployed in the Gulf before the moratorium are now deploying elsewhere.  It costs millions for companies when oil drilling rigs sit idle.  So they’re off to do what – exploit foreign oil fields.  And they most likely won’t be back in Gulf waters anytime soon.

The point, of course, is the entire energy situation in the US is being badly mishandled by the incumbent administration.  And while they sit and fiddle, we become less and less able to effect world pricing for oil because our capability has been hamstrung by a government and bureaucracy that is basically antagonistic to fossil fuels.

That’s a risk, especially in these economic times.  If the economy is still in this sort of shape, pessimism still holds the majority in consumer confidence and gas prices hang around the $3.50 range, even some of the so-called front runners in the GOP at this point might be able to squeak out a win.  And it would most likely, as Charlie Cook predicts anyway, mean a tough election for Congressional Democrats in both houses.

Gasoline isn’t going to go down anytime soon as the unrest continues to roil the ME and N Africa.  And if something happens in Saudi Arabia, all bets are off.  But it is interesting to see how quickly the price of one commodity – albeit a critical commodity – can turn sunshine to gloom with the public.  It is something to watch going forward.



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16 Responses to Gas prices, economics and politics

  • Wait……you mean oil prices can go up without a big-oil GOP stooge warmongering to get more and more of it?

  • The Obamic Gulf War continues, unabated.  As we build a bridge to the Stone Age, technologically, predicated on witch-craft for science.  Yea, Collective!!!


      • He wants to be the Mussolini of the US, and get the trains to run on time.

        • Well, it must be said that Mussolini was not planning for the trains to run on moon pony propulsion.
          (Face palm)  Little wonder people feel a lack of confidence.  This outfit is beyond belief.

          • Maybe, and I’m just talking off the top of my head here, because that’s what this administration does best, maybe if we invested in unions and ‘shovel ready’ projects people wouldn’t pay attention to their declining income, the increasing cost of living, the steady unemployment rate and the prospect of rising taxes!  Hope!  Change!  BUSH!!!!!!!
            The President could give a speech about Winning The Future!  WTF mate! and it will all magically be better!  Clearly we’re gettin all wee wee’d up over nothing!

  • McQIf the economy is still in this sort of shape, pessimism still holds the majority in consumer confidence and gas prices hang around the $3.50 range, even some of the so-called front runners in the GOP at this point might be able to squeak out a win.  And it would most likely, as Charlie Cook predicts anyway, mean a tough election for Congressional Democrats in both houses.

    I think that the senior dems in Congress are in such safe seats that they can personally afford not to care.  I also think that The Dear Golfer is counting on demonizing Big Oil to be a winning strategy: “Those b*stards are to blame for the high price of gas!  Reelect me and I’ll make them PAY!”

    Look for lots of MiniTru exposes about the profits of companies like Chevron and Exxon and especially the salaries and bonuses paid to their top execs… just like back in ’08.

    • In the next 12 months, the pundits have projected that Apple (AAPL) will become the largest (by market cap) of all US companies.
      Can we expect to hear stories about “Big iPod” ?

      • Only if Apple starts making political donations to the GOP, or the dems decide that that their next political crusade is over the “right” to iPods and iPads, or The Dear Golfer decides to fund ObamaCare or green energy or light rail with an iPod tax.

        • Listen, some of these lefty progressives are just bright enough to claim that Egypt has apple orchards we want to control.
          NO WAR FOR APPLES!

  • We must investigate the oil companies!

    • The propensity to blame skeptics and fossil fuel companies for the serial political failures of the environmental movement should be understood as a tribal defense of the collective green ego, not the logical conclusion of a dispassionate analysis.

  • Although pumping US oil may help the general price point depending on how much OPEC cut back on their production, the supply shock of losing Lybia’s oil would still be felt.
    As long as oil is globally marketed, pumping our own doesn’t insulate us from crisis related price jumps.   It might help the mean and help the trade deficit.  But we still have a stake in what happens elsewhere.

    • It can do two things … make any such price jump a short time event (as we increase our output) and, if necessary, in a national emergency, have the domestic capacity to fill our own needs.

      As you point out, it’s a global market, thus it is looking for a certain amount of oil to be produced daily. It doesn’t care where it comes from.

      • I can see the domestic supply argument.
        But a drop in international supply is a drop in international supply.  The shock will be the same unless we implemented some kind of nationalization of the industry.
        In fact, if we produced more and dropped the standing price of oil significantly, there’s a chance Libya’s share of the market would grow because as I understand it they have cheap to extract oil.  If the price point was lower it pushes other producers out of the marketplace and increases Libya’s international share.