It's the same every time. Gas prices rise and the political rhetoric about whose to blame kicks into high gear. Folks forget the rules of supply and demand and start looking for scapegoats. And before you know it, gas prices have supernatural powers capable of forcing a president from office.
Rising gas prices do affect buying choices and can create a ripple effect on the economy. But the "it's because of high gas prices" excuse is used far too often, too widely and long before they can really have an impact. Here's a rundown of just how much influence gas prices have on the president, elections and the economy.
1. Obama's poll numbers
President Obama can blame his rocky approval rating on a number of factors. But just gas prices? Come on. Yet that's exactly what Obama suggested during a recent fundraising dinner. Sure, we remember what happened to Jimmy Carter. But there was a lot more to Carter's story aside from gas prices, including a deep economic recession, the Three Mile Island nuclear disaster and the Iranian hostage crisis.
Maybe Obama is merely acknowledging the fickleness of the public, who are quick to blame politicians for rising prices, and totally ignore their own gas guzzling habits. Still, Obama should tread lightly. To admit gas prices are to blame for his poor approval rating means he'll try to do something about them. And as I've written before, one of the great myths about gas prices is that presidents can control them. Obama is entering a fight he can't win.
Of course, that's way too nuanced for much of mainstream media, which can't resist the Obama-hurt-by-gas-prices story. Which leads me to No. 2....
2. 2012 presidential election
Never mind that the presidential election is more than a year away. It's never too soon to begin speculating whether gas prices will determine the 2012 presidential election. The premise -- endlessly repeated by Republicans to a hungry media -- is that Obama's energy policy has caused gas prices to rise.
Obama has responded to pressure that he's not doing enough. His solution: Do something. And like his predecessor George W. Bush, he's ordered the Justice Department to investigate potential price gouging at gas stations and manipulation in oil markets.
Good luck. As my BNET blogger colleague Alain Sherter recently noted, commodities speculation is perfectly legal. Finding abuses will take time and resources aka taxpayer money. It won't tackle the larger issue of whether excessive speculation -- legal or not -- is pushing up gas prices.
So, what about the rest of the economy? It's true that sustained high gas prices impact the economy. But high gas prices don't always equal bad economic results. For example....
Conventional wisdom tells us that rising gas prices will hurt the trucking industry because one of its largest expenses is fuel. But that's not the case this time around.
The recession took a toll on the industry and more than 1,800 trucking companies shut down. That shipping capacity still hasn't recovered. That means, trucking companies have the power to pass rising fuel costs onto customers. And they will. Which leads us to....
4. Retail sales
Gas prices don't necessarily hurt retail sales. Monthly retail sales figures reported by the U.S. Census Bureau include spending at the pump. So, initially higher gas prices can help push up retail sales figures. If gas prices stay too high for a sustained period, consumers typically stop spending money elsewhere. Retailers can be hurt further once those trucking companies and airlines start jacking up prices to cover their own costs.
That tipping point hasn't happened yet. Consumers are still spending their money pretty broadly. For example, furniture store sales rose the most at 3.6 percent from February to March. Watch the non-gas category sales figures. If gas prices remain high, spending in other areas like furniture, clothing and electronics may start to slide.
Photo from Flickr user Nathan E Photography, CC 2.0