Please Ignore Gas Prices

There's been a ton of attention to gasoline prices the last few weeks, and the effects that the price at the pump may have on the elections. Time Magazine for example, offers this least-common-denominator, conventional wisdom, platitude-spouting piece of fluff. The question it asks is provocative: Who Wins and Loses When Gas Prices Skyrocket? But since it's Time Magazine, the answer has to be obvious - and it's contained right in the subhead:

Who Wins and Loses When Gas Prices Skyrocket?
The G.O.P. faces voter wrath, consumers suffer, and Big Oil hits a gusher. A guide to the pain and gain
By BILL SAPORITO
May 8, 2006

It's not every day that Karl Rove gets a lesson in politics. But the President's ace strategist was brought up sharply at a recent White House meeting with a group of Republican congressional-staff chiefs when he suggested that the best approach to soaring gasoline prices was this: wait. There's no immediate fix available, so let the market work its magic, Rove said. The stratospheric pricing will reduce demand soon enough, and $3-per-gal. gas will be a memory by summer. It's basic economics.

And, if you're a Republican politician facing a re-election challenge in November, it's basic insanity. Rove should be the last person in America to have to be told that textbook economics isn't taking the campaign trip this summer with political reality. Not in a country where the right to drive 70 m.p.h. in a 55-m.p.h. zone while getting 15 m.p.g. is part of the national vehicular patrimony. The voters are getting incensed every time they drop $75 to fill their SUVs and pickups while oil companies tote up record earnings. "What upsets me more than anything is the Democrats and Republicans keep pointing fingers," says insurance salesman Bob Morris, 59, of Palestine, Texas, whose weekly gas bill for his Camry has risen to $75. "Now I'm at the point, whoever's in office, I'm ready to vote 'em out."

That's what horrifies the staff chiefs. Until now, Republicans consoled themselves in this worsening political environment with the belief that congressional elections are local popularity contests. Now that the monthly price of driving to work rivals the mortgage payment, gasoline, more than any other issue, could turn this election into a national referendum. With the G.O.P.'s popularity gauge already down a couple of quarts, Rove was told that if the White House didn't do something, anything, about energy costs, Congress could put the President in the position of using his first veto to kill a windfall-profits tax on oil-company earnings. Says a G.O.P. strategist: "People just want the oil companies whacked."

...Handed the issue that could win back the House, congressional Democrats steered en masse to service stations, like NASCAR drivers pitting for gas. Following a carefully strategized plan of photo ops organized by the Democratic Congressional Campaign Committee, they staged press conferences in filling stations around the U.S. to denounce the Republicans and promote their equally ineffectual solutions. Said John Cranley, who posed near a price sign at a service station in Cincinnati, Ohio: "These gas prices represent the failure of my opponent, Steve Chabot, and George Bush to fight for the middle class. The Republicans and Steve Chabot are giving [Big Oil] $14 billion in your money." The Democratic handout proposal was even more generous. The Dems want to rescind the gasoline tax for a while--which would stimulate demand.

Now I am not sure where to find an authoritative gas price tracker over time. However, I'll use this chart, which Glenn pointed to a little while back. It doesn't give a clear indication of what gas prices have done from May to October in even-numbered years -- ie, in the last 6 months before each Congressional election. If someone has that data, please feel free to link it.

In any case, the chart clearly shows that there are peaks and valleys in gas prices at the pump - both in real terms and in nominal dollars. We know that prices tend to rise in the summer, with the increased demand of summer driving season. Since elections occur in November, that means that there are frequently sharp increases in gas prices in the months before elections.

Now, since Time (and many others) say that the price increases will have a significant impact on the elections this year, let's see what role they've played in the recent past. I've looked at all the elections since 1980 where there was a significant change in the composition of Congress or, (in 1998) where there was little change, depsite expectations that there should have been:

1980
Republicans ride Reagan's coattails to a gain of 35 House and 12 Senate seats. Causes: Carter, hostage crisis, stagflation, energy (including gas lines).

1982
Republicans lose 27 House seats.
Cause: 1981 recession, weak GOP incumbents who rode Reagan's coattails.

1984
Republicans gain 16 House seats, and lose 2 Senate seats.
Cause: Reagan's coattails (House).

1986
Democrats gain 5 House seats and 8 Senate seats.
Cause: "6-year itch."

1994
Republicans gain 54 House seats and 8 Senate seats.
Cause: health care, gun control, gays in the military, Congressional 'arrogance.'

1998
Democrats gain 5 House seats; Senate unchanged.
Cause: "6 year itch" fails to materialize, as voters sour on impeachment.

2002
Republicans gain 8 House seats and 2 Senate seats.
Cause: voters support Bush in the war on terror.

Apart from 1980, I cannot find a recent election where gas/energy prices have contributed significantly to the outcome on election day. Is this year a repeat of 1980 - and is George W. actually Jimmy Carter? Intelligent people have suggested that he is. Or is the price increase this year unlike any since 1980? It may be. But unless one or both of these is true, it's not likely that we'll spend much time on gas prices when we dissect the results of the 2006 elections.

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