The price of gas is a point of contention in this presidential election for many people. Just this morning (Sept. 29), I read a letter to the editor in which the author, Rebecca Orians, calls for voters to take action against the Obama administration, partially because the price of gasoline has increased over the last four years.
I am not endorsing any presidential candidate. I merely wish to point out some of the major factors that affect the price of gasoline, showing that the president of the United States has very limited control over it.
First, crude oil and refined petroleum are global commodities. Expanding middle classes in China, India and some South American economies have significantly increased global demand for gas. According to author Helen Wang, the Chinese middle class is on track to reach 800 million people in 15 years.
Second, the global supply of oil fluctuates for a number of reasons including political instability (Libya, spring 2011), economic sanctions on Iran (continuing), OPEC manipulation of spare oil production and occurrence of natural disasters.
Third, there is speculation on the commodities market so that crude oil price is not just determined by basic supply and demand, but also by financiers who place bets on what future oil prices will be.
Fourth, taxes on gasoline occur at not only the federal level, but also at the state and local level. According to the July 2012 American Petroleum Institute summary report, all states tax motor fuel at a higher rate than that of the federal government.
The president has the power to tap into the Strategic Petroleum Reserves of the United States in the event of emergency, but these reserves are not intended to be a permanent solution. He also may mandate where drilling for oil is allowable, but such decisions would take years to affect oil supply. And as oil prices become an increasingly global issue, stateside drilling may make little to no difference at all.
Political parties rely on the fact that people think the president has substantial sway over the price of gasoline. When you head to the polls on Election Day, keep this in mind: This year, the Republicans are condemning Obama for gas prices. Four years ago, the Democrats were condemning George W. Bush. And in four years, the party not in the White House will be calling out the incumbent.