Higher gasoline prices could stall recovery, Obama's 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.
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."
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