Gas prices are falling: why that might not really help Obama

Only two months ago, it appeared the rising price of gasoline would be a political liability for President Obama’s reelection campaign, and his Republican challengers quickly seized on the topic.

Now, gasoline prices are barely registering with voters as an issue.

What’s happened?

Since gasoline hit $3.94 a gallon on April 5, the price at the pump has dropped by 19 cents to a national average of $3.75, reports the AAA national motorists club.

The price of gas has fallen for 23 consecutive days, and the price of a barrel of oil has been falling, closing at $95 on Tuesday – down about $14 from its late-February peak.

Lower gasoline prices are good for the US economy because consumers end up with more money in their pockets when they leave the gas station. And, since most Americans keep track of what they pay at the pump, the price also has a psychological impact: rising prices put them in a grumpy mood; falling prices make them feel better.

But one big impact of falling prices is political – Americans no longer appear to be blaming anyone in Washington for what they are paying at the pump.

“Falling gasoline prices have taken the edge off the issue,” says Dennis Jacobe, chief economist at Gallup, the polling organization, in Washington. “Gasoline prices are still very high but not near the peak of July 2008, when it was $4.11 a gallon.”

In a recent George Washington University/Politico poll, only 3 percent of respondents consider energy and gasoline important, compared with 28 percent who consider the economy important.

The lower gasoline prices may also take some of the bite out of likely Republican nominee Mitt Romney’s critiques. On April 3, when the price at the pump was about $3.94 a gallon, Mr. Romney, at a campaign appearance in Waukesha, Wis., called going to a gasoline station “kind of a frightening experience,” noting that “your credit card may max out, the pump may stop if it hits $100.”

Falling gasoline prices could become an even larger factor once summer begins, because Americans tend to drive more then.

“The president will be buoyed as we move into the summer season,” says Bill Connelly, a professor of politics at Washington and Lee University in Lexington, Va. “Consumers will be more attentive than usual.”

AAA estimates that American households use about 1,200 gallons of gasoline per year on average. If prices remain at current levels, this would lead to a savings of about $216 compared with a year ago.

“Anytime you can help ease some of the pain at the pump, it is positive for the American consumer,” says Avery Ash, manager of regulatory affairs for AAA in Washington.

In surveys, AAA has already found that the price of gasoline has changed Americans’ habits. For example, Mr. Ash says, people are now combining trips to stores to save money on gasoline.

But softening gas prices don’t necessarily mean increased support for Obama, some analysts say.

Even if gasoline prices fall, it is not a given it will translate into votes, says Herman Schwartz, a professor of politics at the University of Virginia. “Think about why they go up and down,” he explains. “A stronger economy leads to more demand; they are falling now because the world economy is hitting a rough patch.”

Mr. Schwartz says oil traders are watching political events in Europe, where the French have voted in a Socialist president and the Greek political situation is in turmoil. “They are justifiably anxious that Europe is going into a deep recession,” he says.

In the US, despite the lower gasoline prices, the economy as a whole will continue to be a major issue for the voters, says Mr. Connelly. “President Obama is out of the frying pan and into the fire of economic statistics,” he says. “Now, we’re into other economic issues.”

For example, last Friday, the Commerce Department reported that in April, the economy created 115,000 jobs, a performance that leaves Obama open to criticism. After the jobs report, Mr. Romney, speaking on Fox News, stated, “We should be seeing numbers in the 500,000 jobs created per month. This is way, way off from what should happen in a normal recovery.”

The lower gasoline prices may also take some pressure off Obama to act quickly on the Keystone XL pipeline, whose owners have reapplied for a permit to move oil from Canada to the US after adjusting the proposed route. Obama turned down the first request for approval of the pipeline because he said it would go through environmentally sensitive land in Nebraska.

“From the point of view of lower gasoline prices, it will take some pressure off the president,” says Professor Schwartz. “But it won’t change the underlying issue that the oil companies are making a lot less money with the pipeline not built because there is a glut of oil in the Midwest. The pipeline will help move oil from the low-priced Midwest to the high-priced East Coast market.”

On Tuesday, the oil industry trade association held a press conference to ask Obama to act on the pipeline. “To borrow from the president’s campaign, it’s time to move forward on this critical project,” said Marty Durbin, executive vice president of the American Petroleum Institute. “Keystone XL is as ‘good-to-go’ as it gets.”

As part of its efforts to convince Obama that the pipeline might also be good politics, the API held the press conference with Mario Lopez, president of the Hispanic Leadership Fund, which identifies itself as nonpartisan. The Latino vote will be especially important in Florida, a toss-up state.

Latinos, said Mr. Lopez, have been especially hurt by the economic downturn. He reasons that there will be a “ripple effect” that will filter down to Latino small-business owners if Obama approves the pipeline.

[Editor's note: Figures in this story were updated at 10:30 a.m. on May 9.]