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%|