Political Analysis: What exactly drives gas prices in the United States?

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SPRINGFIELD, Mo.– Gasoline is something most everyone buys regularly, but how much are those swings in prices at the pump due to political changes in Washington?

Jack Hooper of Springfield believes there are political fingerprints all over the price swings.

“Well, I don’t like it,” said Hooper. “There were things done that shouldn’t have been done and that’s why they’re going up.”

However, Gasbuddy Analyst Patrick De Haan puts the blame into a broader context.

“There’s a lot of frustration and anger because if you voted for somebody and they didn’t get into office, you’d like to blame the person you didn’t vote for,” said Haan. “There’s a lot of misunderstanding and outside factors have much more weight on this than one person.”

The national average in April 1993 was $1.07 per gallon. Ten years later, during the Iraq War, the average price was $1.64. Unfortunately, looking at price swings in isolation means missing long-term trends.

So, economists study gas costs as mathematical log differences in monthly high and low prices. It’s more complex, but it better accounts for the price swings.

If we follow the economist’s approach using 336 months of price data from April 1993 to March 2021, we see price dips and peaks across each presidential administration. The dollar amounts show, the national price per gallon fluctuates and inflation is not a big issue. Gas prices trended below overall inflation for the 100 years.

The highest average price swings occurred under George W. Bush, so were certain presidents better than others at lowering gas prices?

“There’s a lot of misunderstanding, and part of this is that politicians have lied to the American people, and implied that they have more control over these things when they really do not,” said Haan. “This is a global commodity.”

However, curiosity calls for a calculation of political impact. So, by using something called time series analysis, we isolated different factors on monthly price changes. Crude oil prices drove gas prices the most, followed by Asia’s increased demand, and increased futures trading. The presidential influence was far less effective.

So, looking at the big picture, politics may play some role in gas prices but the real cause includes the American people.

“It’s still overall a buyer and seller, a market of economics,” said Haan.

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