Is there a relationship between presidents and gasoline prices?

special_gas_prices_obama_bush.jpg The latest contention from the free-market universe is a comparison of the first two years of presidential terms on gasoline prices. It comes today from the conservative Heritage Foundation in support of a belief that presidential energy policies are directly reflected in the price of gasoline.

All of these policies raise gas prices at the pump by either: 1) decreasing the availability of domestic energy supplies, or 2) increasing regulatory costs on gasoline production.

President George Bush was no saint when it came to free market energy policies either. He mandated the use of ethanol, put off opening up the Outer Continental Shelf till the end of his second term, supported the expansion of renewable energy tax credits, tried to subsidize the nuclear power industry, and caved into environmental pressure by allowing the EPA to begin the global warming regulation process.

There’s certainly an argument to be made that energy policy has an impact on energy prices, but this one seems particularly aimed at those who aren’t interested in a more intellectual look at the complicated world of commodities.

Primarily, it fails to recognize a link between the worldwide economy and the demand for energy, which is best represented in the law of supply and demand.

In recessions, for example, there is less business activity, fewer people working, and less demand for gasoline.

Let’s use the Upper Midwest and the dates of the most recent recessions, and leave the usual political squabbles out of the equation, and see if, perhaps, there’s another relationship in the price of gasoline besides who you voted for.

Dates of recession Price at beginning Price at end Difference
12/07 – 6/09 $3.06 $2.34 – 24%
3/01 – 11/01 $1.38 $1.12 -19%
7/90 – 3/91 $1.23 $1.05 -15%

For the record, though, here are how the recent presidents have fared throughout their terms on gasoline prices:

President Price at beginning of term Price at end of term Difference
Bush – 2nd term $1.83 $2.70 +48%
Bush – 1st term $1.45 $1.83 +26%
Clinton – 2nd term $1.23 $1.45 +18%
Clinton – 1st term $1.05 $1.23 +17%
Obama – 1st term* $2.70 $3.03 +12%
  • JackU

    The first point raised in the linked article gets to the point. While paying what Europeans pay maybe a bit steep, at least paying what our friends to the north pay would be a start in getting Americans to consider how we use fuel. For example I paid 3.099 for a gallon of gas this morning. That seems to be a the current “average”. A check of the website for Duluth shows that the prices there are similar to what they are here. A check of the price in Thunder Bay, Ont shows that their cheapest price (which is among the cheapest in Ontario) is 1.029/liter or about 3.88/US Gallon. A difference of about 25%.

    I don’t know what the current average mileage in the US is but let’s play the game this way. Let’s say that the average mileage is 24 mpg. Then using the annual mileage of 12,000 miles. The average driver in the US uses 500 gallons of gasoline. If the average mileage is increased to 30 mpg then the usage goes down to 400 gallons a year. If you go to 40 mpg then the usage is only 300 gallons per year. At that rate you can fuel 5 cars with the fuel originally need by 3 cars. That will help stabilize the price by lowering demand. But the price has to get high enough for people to demand vehicles that get that kind of mileage.