Tuesday, March 13, 2012

Gas Prices and the Presidential Election

Four years ago I wrote about how gas prices would magically come down during the Presidential election cycle. You can see my posts HERE and HERE.

The premise of my posts at the time was that oil companies and the energy sector of our economy has enjoyed such spectacular and historical profits with Republicans in the White House that they would be willing to take a hit for a few months to help ease one very painful economic issue that most Americans ascribe to "the economy"...and therefore, in theory, lessen their likelihood to turn out to vote or to vote for Obama on the need for a better economy and more likely to be open to vote for McCain.

Based on my personal experience at my local gas pumps that year, I can say that I was right in my prediction about prices.

For the exact same reasons, I now predict that gas prices will rise steadily over the next several months and into prime time election season. To be clear...the energy sector wants a Republican as president for the major deregulation and massive tax breaks they believe a conservative will bring to their industry. Therefore, it benefits them for the electorate to have a reason to be mad at the Democratic incumbent and more likely to vote for the Republican alternative. Gas prices are such an ever day reality in virtually every Americans' life that a steady or steep  rise would really hurt. So, I think oil companies will find ways to raise prices during this election season.

Sure, you'll hear about the threat of a nuclear Iran, reduced refining capacity in the U.S. and general screwed up global economy as reasons. And yes, some of those things do have an impact on gas prices here in the U.S. But think about this: four years ago we were in "hot" wars in Iraq and Afghanistan, and in the absolute depths of the economic crises...and prices at the pump when down!

No, what you need to do is compare all that international and infrastrcuture reasoning with the motivation of US energy companies to sustain record profit margins on a quarterly basis...and my opinion is you see the primary reason for gas prices going up now. It's a long term strategic play by big oil to do what they can to maximize the chances of a Republican winning the presidency...and more seats in Congress if possible.

So to close, gas prices at the local Shell station near my house in the Seattle area at $4.09 per gallon today, March 13, 2012. I'll check back with you in the early summer and then October to see where we're at and if I'm correct on my prediction.

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