Higher gas prices cloud Obama’s re-election hopes

TOM RAUM

Asso­ci­ated Press

WASHINGTON — Soar­ing gaso­line prices are threat­en­ing to under­cut Pres­i­dent Barack Obama’s re-election prospects and offer­ing Repub­li­cans an easy tar­get. With prices push­ing $4 a gal­lon and threat­en­ing to go even higher, Obama sought Thurs­day to con­front ris­ing pub­lic anx­i­ety and strike back at his GOP critics.

“Only in pol­i­tics do peo­ple root for bad news, do they greet bad news so enthu­si­as­ti­cally,” Obama said of Repub­li­cans. “You pay more; they’re lick­ing their chops.”

Obama said dis­mis­sively that all the Repub­li­cans can talk about is more drilling — “a bumper sticker … a strat­egy to get politi­cians through an elec­tion” — when the nation’s energy chal­lenges demand much more. In a speech in Miami, he pro­moted the expan­sion of domes­tic oil and gas explo­ration but also the devel­op­ment of new forms of energy.

For all the polit­i­cal claims, econ­o­mists say there’s not much a pres­i­dent of either party can do about gaso­line prices. Cer­tainly not in the short term. But it’s clear that peo­ple are con­cerned — a new Asso­ci­ated Press-GfK poll says seven in 10 find the issue deeply impor­tant — so it’s sure to be a polit­i­cal issue through the summer.

“Right now, we’re expe­ri­enc­ing yet another painful reminder of why devel­op­ing new energy is so crit­i­cal to our future,” the pres­i­dent said. At an aver­age of $3.58 a gal­lon, prices are already up 25 cents since Jan. 1, and experts say they could reach a record $4.25 a gal­lon by Memo­r­ial Day.

Those higher prices could hurt con­sumer spend­ing and unravel some of the recent improve­ments in the econ­omy. And they could also be a daily reminder to vot­ers to ques­tion Obama’s con­tention that he’s mak­ing the nation — and them — more secure.

While motorists are already start­ing to com­plain, many econ­o­mists see the $4-a-gallon mark as a break­ing point above which the econ­omy starts to suf­fer real pain. Ana­lysts esti­mate that every one-cent increase is roughly a $1.4 bil­lon drain on the economy.

Obama’s Repub­li­can chal­lengers aren’t let­ting it all slide by. They have stepped up their attacks on his energy poli­cies, includ­ing his rejec­tion last month of a pipeline to carry oil from Canada to refiner­ies on the U.S. Gulf Coast. And they’re full of promises.

“I’ve devel­oped a pro­gram for Amer­i­can energy so no future pres­i­dent will ever bow to a Saudi king again, and so every Amer­i­can can look for­ward to $2.50-a-gallon gaso­line,” for­mer House Speaker Newt Gin­grich said in the Wednes­day night GOP debate in Mesa, Ariz. He calls his strat­egy “Drill Here, Drill Now.”

At the same event, for­mer Sen. Rick San­to­rum of Penn­syl­va­nia — who has warned of $5-a-gallon gas — asserted that “we have a lot of trou­bles around the world, as you see the Mid­dle East in flames and what’s going on in this coun­try with gas prices and the econ­omy.” And for­mer Mass­a­chu­setts Gov. Mitt Rom­ney sug­gested that even more trou­bling than ris­ing gaso­line prices was Iran­ian Pres­i­dent Mah­moud “Ahmadine­jad with nuclear weapons.”

In his speech at the Uni­ver­sity of Miami, Obama sought to draw a con­trast with his GOP chal­lengers and made a pointed ref­er­ence to what he sug­gested was Repub­li­can glee at ris­ing gas prices.

“And you can bet that since it’s an elec­tion year, they’re already dust­ing off their three-point plans for $2 gas,” Obama said. “I’ll save you the sus­pense. Step one is drill, step two is drill, and step three is keep drilling. .. We’ve heard the same thing for 30 years. Well, the Amer­i­can peo­ple aren’t stupid.”

Address­ing the ris­ing pub­lic anx­i­ety, Obama said, “There are no quick fixes to this prob­lem, and you know we can’t just drill our way to lower gas prices.” Any­one sug­gest­ing oth­er­wise was not being hon­est, he said.

Still, Obama said he had ordered his admin­is­tra­tion to search for every pos­si­ble area to help con­sumers in the com­ing months. He said his administration’s “all-of-the-above strat­egy,” one that includes oil, gas, wind and solar power, is the “only real solu­tion” to the nation’s energy challenges.

Gin­grich quickly dis­missed Obama’s energy speech as “excuses and fantasies.”

Pres­i­dents often get blamed for ris­ing gas prices, but there’s not much they can do about them. The cur­rent increases at the pump have been dri­ven by ten­sions in Iran and by higher demand in the U.S. as well as in China, India and other quickly grow­ing nations.

“Obvi­ously, peo­ple go to the pump all the time, so it’s some­thing that really hits home with the vot­ers,” said Fred Green­stein, a Prince­ton Uni­ver­sity pro­fes­sor emer­i­tus of pol­i­tics. “It’s an easy issue to talk about, and not an easy issue to accom­plish very much on.”

In his Miami remarks, Obama said that despite polit­i­cal crit­i­cism of his poli­cies “Amer­ica is pro­duc­ing more oil today than at any time in the last eight years. He also noted that, for the first time in 30 years, the United States is now export­ing more petro­leum prod­ucts than it imports.

But Jack Ger­ard, the pres­i­dent of the Amer­i­can Petro­leum Insti­tute, chal­lenged Obama’s appar­ent effort to take credit.

“While oil pro­duc­tion is up, the increase relates almost entirely to invest­ment and leas­ing deci­sions made before, some­times long before, this admin­is­tra­tion came into office,” Ger­ard said. “The increase is also due to oil and gas devel­op­ment on pri­vate and state lands over which the admin­is­tra­tion has lit­tle or no con­trol at all.”

Though Obama’s approval rat­ing on the econ­omy has climbed, his neg­a­tive rat­ing on han­dling gas prices is stag­nant. Just 39 per­cent approve of what he’s doing there, and 58 per­cent dis­ap­prove, accord­ing to the new AP-GFK survey.

Mark Zandi, chief econ­o­mist at Moody’s Ana­lyt­ics, said gaso­line prices are likely to keep ris­ing as the sum­mer dri­ving sea­son approaches. “Increas­ingly, it’s becom­ing the biggest threat to the econ­omy,” he said. “And there is lit­tle pres­i­dents can do to influ­ence gaso­line prices in the near term.”

Some law­mak­ers have called for Obama to release oil from the nation’s Strate­gic Petro­leum Reserve.

“Ris­ing gas prices could be the dif­fer­ence between an econ­omy that con­tin­ues to recover and an econ­omy that sinks back into reces­sion,” said Rep. Edward Markey, D-Mass., among those call­ing for such a move.

The emer­gency reserve is kept in salt cav­erns in Texas and Louisiana and con­tains about 700 mil­lion bar­rels of oil. There are 42 gal­lons in each bar­rel. Last year, as prices rose, Obama autho­rized the sale of 30 mil­lion bar­rels of oil from the reserve.

How­ever, econ­o­mists sug­gest that tap­ping the reserve to increase the amount of oil on the mar­ket has only a mod­est and tem­po­rary effect on gas prices.

Will Obama take that step? White House spokesman Jay Car­ney says, “We never take options off the table.”

Obama may just have to get used to the crit­i­cism, because it prob­a­bly isn’t going away any­time soon, said James Thurber, an Amer­i­can Uni­ver­sity polit­i­cal sci­ence pro­fes­sor. “Repub­li­cans will hit him with any­thing that comes up which makes him look bad,” he said.

Still, as long as the econ­omy seems to keep improv­ing, Obama prob­a­bly won’t be hurt too much by the attacks “unless gas goes over $5 a gal­lon,” Thurber said.

Posted by AP News on Feb 23 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.