Gas Prices Always Fall During Election Seasons
There’s a theory that comes up repeatedly, the essence of which is that fuel costs tend to decrease in the lead up to elections — to the advantage of the incumbent. The suggestion is that the president can manipulate fuel prices before voters head to the polls.
But is there any validity to this theory?
First and foremost, there’s no doubt that elevated fuel costs can pose an electoral dilemma for presidents and their parties.
It’s why Republicans have been targeting President Joe Biden with criticisms as fuel prices have risen 60 cents since the start of 2024, with the national average now at $3.67. Democrats faced even more criticism in the summer of 2022 before the midterm elections when fuel prices rose to a record high above $5 that June.
Conversely, low or declining fuel prices can be a great talking point for parties in power. So it shouldn’t come as a surprise that the Biden administration is endeavoring to assure constituents it will continue to do everything possible to make fuel prices affordable.
Denton Cinquegrana, the main oil analyst at the Oil Price Information Service (OPIS), says presidents don’t really have much power to change gas prices. But he completely gets why politicians try to say they’re responsible for low prices and blame their opponents when prices are very high.
During the last midterm election campaigns, Democrats talked about the big gas price drops in the second half of 2022 as oil prices went back to more normal levels after Russia invaded Ukraine. If prices go down before November, expect the Biden campaign to talk about it again.
“If I were the president or if I could control everything and gas prices were going down before the election, I would definitely take credit for me — despite I didn’t have anything to do with it,” Cinquegrana says.
He says it’s true that gas prices usually go down before November elections. But there’s a big thing to remember: Gas prices also usually go down in the fall when there isn’t an election.
Why do gas prices drop in the fall?
There are two main reasons for this seasonal decrease in U.S. gas prices: 1) Demand for gas usually goes down after Labor Day following the summer driving season; and 2) Every autumn, there’s a switch from summer-grade to winter-grade gasoline, and the winter-grade fuel tends to be a bit cheaper.
These two factors are the best explanation for the price drops before elections, according to Cinquegrana. Since we have our national elections in even years, the fact that autumn price drops are also common in odd years suggests that the trend isn’t because politicians are influencing gas prices before national elections.
Citigroup Energy Strategist Eric Lee said U.S. gas prices fluctuate with global market trends. Mostly, it’s nature, geopolitics, and the global supply and demand for oil that affect consumer gas prices, not the actions of American presidents and politicians, he said.
Gasoline is produced from crude oil and other petroleum liquids. Crude oil prices account for 57% of the cost of a gallon of gas for drivers at the pump, according to the U.S. Energy Information Administration.
Weather events can disrupt oil and gasoline infrastructure, pushing prices higher, and seasonal conditions affect our driving habits and the demand for fuel. (Gas prices have recently risen due to increased springtime driving demand and the transition to summer-grade gasoline, among other factors.)
Lee said the idea that gas prices drop before elections isn’t supported by empirical evidence. Examining the changes in gas prices in the months leading up to midterm and presidential elections, he said he doesn’t see a clear pattern of movement in either direction, aside from the seasonal trends we observe every year.
“It’s pretty inconsistent when I look at like three months before November and six months before November since 1993,” Lee said. “There were some significant decreases around 2007 and 2008, but primarily due to the great financial crisis.”
Does the president control gas prices?
Lee explained that while it makes sense American politicians would want to try to lower gas prices before elections, “there are very limited mechanisms” to actually do so.
In 2022, the Biden Administration’s decision to release oil from U.S. strategic reserves, along with many other countries, definitely led to lower gas prices than what we would have otherwise seen, he said.
“This was an exceptional release from the strategic petroleum reserve, which was pretty unusual in terms of the number of countries involved,” Lee said. “That worked.”
Cinquegrana agreed that the release of oil from reserves was a rare instance of an administration’s action having an immediate, direct impact on gas prices.
“I would say that the releases from the strategic reserves, I don’t think they necessarily dropped gas prices, what I do think they did was they averted prices from going even higher than they did,” he said.
At the moment, it’s unclear if there will be more releases from strategic reserves before the November election. Last week, when contemplating if such a move is being considered, White House officials said Biden wants gas prices to “stay affordable” and “will do what he can to ensure” that happens, according to CNBC.
According to J.P. Morgan, gas prices would need to approach $4 for the likelihood of additional releases from the strategic reserves to increase.
Apart from releasing oil from reserves, presidents have few other options to affect gas prices. The Biden administration has urged OPEC+ to increase its oil production, but the organization continues to limit how much oil it’s releasing to keep prices up.
The administration has also tried to boost domestic production, and the U.S. is currently producing record levels of crude oil. However, increasing oil production isn’t an immediate process. It takes years to make progress, so it would be difficult — if not impossible — to use this as a strategy to influence an election.
Summary on gas prices and elections
Despite the president’s limited control over gas prices, voters perceive it differently. Analysts suggest that voters are highly concerned about gas prices, and the price trend in 2024 could influence the election outcome.
“President Biden’s anticipated re-election hinges partly on gasoline prices staying around $3 per gallon. All things being equal, if gas prices rise again to nearly $4 per gallon, Trump will win,” Moody’s Analytics stated in a report earlier this year.