Thursday, June 02, 2005

Did the Oilers Aid Bush's Reelection??

Presidential approval ratings and gasoline prices have a pretty predictable inverse relationship. The higher the cost of petrol, the less the public is inclined to favor the job that the nation's CEO is doing. From that point, I'll take a little logical leap and suggest that this tendency should translate to votes won or lost in an election.

Which brings up the question: Could shaving a few pennies off the cost of petrol have turned the tight 2004 presidential contest to George Bush's favor? Last year, as the voting drew nearer, a few of us were noticing that gasoline prices did not seem to be climbing to the levels that we would have expected, given the extent to which the expenditures for oil were escalating.

In the past several months, I have looked at shorter post election time frames and not found any variations worthy of note. But, at this point, with the benefit of some 29 weeks beyond the passing of the plebiscite, this extended interval reveals that a change in pricing has taken place. The data, while perhaps not superficially spectacular, are sufficient to raise an eyebrow or two.

In the 13 weeks leading up to the culmination of the contest between George Bush and John Kerry, gasoline sold for an average of $1.92.41 across the United States. In the nearly seven months since that landmark event, through May 23, 2005, gasoline has edged over the two buck threshold, going for a mean of $2.00.06, or 7.65 cents more per gallon.

It's necessary to note that oil prices, the key factor in determining what we pay for gasoline, have risen also. At the same time, they haven't escalated all that much. During the quarter of a year prior to the referendum, oil was available for $48.12 for a 42 gallon barrel of West Texas Intermediate Crude. In the seven months afterwards, the same grade of product has been selling for a puny added premium of $1.11, with the average tab being $49.23. Normally, that kind of rise in the cost of oil is not enough to drive gasoline up by the seven and two-thirds cents that we have seen.

If oil is not accounting for the ascending pump prices, where has the extra money gone? Looking at the 'Spread' – the cost for a gallon of gasoline after subtracting the going rate for the same amount of oil – it would appear to have lined the pockets of the petroleum refiners and marketers. Federal and state taxes eat up some of the Spread, but they do not appear to have made the difference.

Comparing the pre and post election periods, in the three months prior, the Spread was 77.83 cents. From early November of 2004 through May 23 of this year, it has been 82.85 cents, 5.02 cents above where it was previously. That accounts for nearly two-thirds of gasoline's gain during this time span, with the remaining one-third attributable to oil. For some perspective, since 2000, the Spread has ordinarily constituted one-half of petrol's full retail price.

Humm. Although these findings can't be deemed sufficient to conclude that the Bush friendly fossil fuel energists did him any favors, it certainly would be enlightening to hear a few of their spokesmen elaborate upon why such discrepancies exist. As the television character Ricky Riccardo was often heard to demand of his beau: “Lucy, you got some'splainin' to do!”

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