The big political story of the last month has not been the GOP primary, Senate retirements or the payroll tax cut extension. It has quite simply been gas prices. More specifically, spiking gas prices. These spiking gas prices are a vivid reminder to all Americans of how the economy is still struggling and their pocketbooks are not getting any fatter. And for President Obama’s reelection chances that is bad, bad news.
The recent uptick in gas prices is due to two factors. Increased demand from China and boiling tensions in the Middle East. Political talking points aside from the left and the right and it becomes easily clear to see how this is a major vulnerability for the president. The President’s job approval numbers have ticked up as of late. Most 3-4 day polls have him over 50% approval and Gallup has him around 47% (from a low of 42% at the beginning of the year). Even Rasmussen has him moving up. The President’s numbers have moved up largely for one reason, increased optimism about the economy.
The unemployment rate has fallen, jobs have been created for the last six months, GDP growth was 3.2% in the 4th quarter of last year and the payroll tax cut extension is a short boon to the economy (nevermind it will move the bankruptcy of SS sooner into being). Rising gas prices jeopardize all this.
Liberals lament the fact we live in a petrol based economy. Well we do. And that means rising gas prices affect every aspect of our economy. From food production to simply driving to work every aspect of our economy and daily lives is affected by rising gas prices.
From a purely economic standpoint the rise in gas prices threatens to stall our economic recovery. Businesses have more overhead costs and have to pass it onto the consumer, Americans as consumers have less money in their pockets to spend and these two factors work in a cyclical, vicious way. The economy cannot grow without businesses being able to earn cash and hire new employees and consumers cannot spend if more and more of their discretionary income is eaten up by higher gas prices and increased living expenses.
From a political standpoint rising gas prices are a disaster for the president. It is likely that gas prices have already begun to affect the economy and at the end of the day the economy is the president’s baby. Numerous polls have shown a plurality still blame Bush for the economy but that margin is narrow and growing narrower in new surveys. If gas prices to rise it is quite feasible the GOP can use the issue of the Keystone Pipeline to deadly effect in the general election.
The electoral history of gas prices is volatile. In 1980 Jimmy Carter was soundly defeated by Ronald Reagan, largely due to high fuel prices and stagflation. In 1992 when gain fuel prices started to rise sharply than incumbent H.W. Bush was defeated. The exception to this rule was G.W Bush in 2004. But Bush II had the luxury of having gas prices rise 2 years before the election and the economy starting to grow again from a recession in 2004.
Put all this together and as gas prices rise Obama’s fortunes fall. The electoral consequences of gas being at $5 are unprecedented and toxic. Worse for the president is that he has been touting his economic recovery for over a year. Now, just as it seems his claims are gaining steam, rising gas prices threaten to undo all that.