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Gas Prices and Short Memories Might Boost Obama

By    |   Tuesday, 26 June 2012 08:32 PM

Gasoline prices are down from the highs reached this spring. Retail prices have fallen more than 12 percent since April and the futures market is pointing towards even lower prices. Traders in unleaded gasoline futures have pushed prices down by 23 percent and at recent levels they suggest that gas at the pump should drop to about $3 a gallon by late-July.

This would benefit President Obama’s reelection campaign. Gasoline prices are one of the most important economic indicators for politicians. Falling prices in the six months leading up to Election Day have historically helped win reelection.

Consumers seem to have forgotten that the average price of gasoline was below $2.40 a gallon last time they voted for president and a gallon of gas cost less than $2 when Obama was inaugurated. After the fall, gas has almost doubled in price under the current administration.

While consumers will be hearing that falling gas prices are equivalent to a tax cut, the increase in the price of gas since Obama became president are equivalent to a tax increase of about $1,700 a year per family and that burden falls on the 99 percent as well as the top 1 percent. The average American family has seen its income drop 1.7 percent over that same time.

In 1980, Ronald Reagan famously asked Americans if they are better off than they were four years ago. Data suggests we are not better off now than we were four years ago, but voters seem more interested in shorter term comparisons. Obama could very well win by asking “are you better off than you were four months ago?”

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Tuesday, 26 June 2012 08:32 PM
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