Petroleum Politics

PETROLEUM POLITICS….Brendan Nyhan is gone from the American Prospect and is now back at his own site. I think this is for the best: TAP’s politics are liberal while Brendan’s are centrist. There’s no special reason that a liberal magazine should go out of its way to beat up on liberals for minor peccadilloes, as Brendan sometimes does, but neither is there any reason that a centrist should be prevented from beating up on liberals in his own way if he wants to. It was not a felicitous marriage in the first place.

That said, Brendan does his centrist thing today by debunking something that’s become a common refrain in the press: namely that President Bush’s approval ratings are driven almost entirely by gasoline prices. The basic chart is here, but as Brendan points out, there’s a problem with it:

[9/11] boosted President Bush’s approval ratings into the stratosphere, and they’ve more or less declined consistently since then. Meanwhile, gas prices have trended upward over Bush’s presidency. The two series are correlated, but any variable that trended upward during this time period would show a similar relationship (I can “explain” 62 percent of the variance in Bush approval using a variable that just counts the number of months he has been in office).

Gasoline prices almost certainly have some effect on presidential approval, but a serious look at the data suggests it’s a modest one. This is, I suppose, good news for liberals since it means that the recent fall in gasoline prices doesn’t necessarily spell doom for the November elections.

And speaking of gasoline prices, Andrew Tobias is suspicious about their recent sharp drop:

So gasoline prices have come down and people are happy again ? just in time for the mid-term election. What a stroke of luck for the oil companies! What a further stroke of luck it would be if prices then went back up after the election.

Well, this does look suspicious. But here’s the thing: over the past six weeks the global price of crude oil has decreased 18%; the U.S. price of oil has decreased 18%; and the spot price of oil has decreased 15%.

And the price of gasoline? It’s gone down 16%. The end of the summer driving season accounts for a bit of this, but as you can see in the chart on the right, gasoline prices have followed crude oil prices pretty closely for the past six years, which means that this drop is pretty much what you’d expect based on the underlying drop in the cost of oil. And while it’s possible that American oil companies and hedge funds have somehow conspired to manipulate the entire global oil market over the past couple of months in the service of Republican victory in the upcoming midterm elections, it’s not very likely. Even Dr. No would have trouble with that. I suspect this needs to be marked down as coincidence, not conspiracy.