When we discuss U.S. gasoline prices with reporters across the country it’s not unusual to hear many echo the local consumers’ anxiety; they want to know why retail prices haven’t declined more precipitously now that the peak summer driving season is behind us.
Many mistakenly believe that the U.S. president, whomever he might be, is the most powerful man in the free world and can surely do something to fix these gas prices. Some reporters, perhaps, naively believe this too.
The logician in me wants to ask them why they’re not asking: ‘what’s keeping crude oil propped up?’
NYMEX crude oil currently trades in the low $90s. That’s puzzling because the news from Reuters’ Ramya Venugopal out of Singapore tells us that investors are concerned about a shaky global economy which is likely to hurt oil demand. Data from China, the world’s second largest consumer of oil behind the U.S., reflects weak manufacturing activity and a seventh straight quarter of slowing economic growth. Japan is similarly pessimistic and Spain’s debt problems also point toward diminishing demand.
In the world’s largest oil market, the U.S. faces consistently high unemployment numbers (above 8%) with an economy stuck in the mud. Gross domestic product expanded at a 1.3 percent annual rate, the slowest pace since the third quarter of 2011 and down from last month's 1.7 percent estimate, the Commerce Department said last week.
Understandably, those indicators that might push global crude prices lower are negated by escalating threats expressed alternately by Israeli President Benjamin Netanyahu and Iran’s President Mahmoud Ahmadinejad.
Against this context of weakening economies and worrisome Middle East volatility the U.S. average price of gasoline slowly declines but still remains nearly 40 cents higher than the national average price from one year ago.
By Election Day there’s a fair chance the national average could be closer to $3.65, and inevitably more than a few folks casting their votes might think the president had something to do with it! But, no matter what the price of gas is on Nov. 6, you can be sure that –given the nation’s hypersensitivity to gas prices-- both candidates should be grateful that we hold national elections in November rather than in April or May…
That’s because whoever wins the election will surely be blamed in springtime when the national average price of gas makes its aggressive, annual ascent. Over the past eight years, the national average price of gasoline, whatever it has been on Dec. 31, has climbed by an average of 90 cents per gallon to its peak in the following year.
If a president wants to reduce the gas price roller coaster, he’ll encourage the EPA to settle on a single blend of gasoline that works year-round, and prod states like California to align with federal fuel standards and abandon costly boutique blend requirements of their own.