“It’s the gas prices stupid.” Oil and the Fate of the Obama Presidency

“It’s the gas prices stupid.” Perhaps this is the new mantra that David Plouffe should have posted in the Obama re-election headquarters, updating the famous “It’s the economy stupid” that James Carville coined for Bill Clinton’s presidential campaign in 1992. Yet unlike in 1992 when that saying and strategy slew a sitting incumbent, Obama should worry that the tables could be turned on him and gas prices could doom his bid for a second term.

In a recent Washington Post poll rising gas prices are sinking Barack Obama.  According to the poll, his disapproval rating is 50% with disapproval of his handling gas prices at 65%. Overall disapproval on the handling of the economy is at 59%. All of these numbers are increases in the last few weeks after economic good news had steadily helped him politically.

Confirming the salience of gas prices were exit polls in Ohio last week dramatically demonstrating the worry and concern in that swing state among many, including the crucial swing voters.

But there is a particular and vexing problem for Obama with rising gas prices that suggests that he has few options to insulate himself.

Think about reasons for rising gas prices. They include speculation over Iran and whether Israel will bomb Tehran’s potential atomic capabilities. There is also the decision by Iran not to sell oil to some countries in response to an embargo against it. There is also rising demand for oil across the world as the economy improves, and there are also some shutdowns in refineries for a variety of reasons that remain dubious and perhaps monopolistic.

Obama wants to pressure Iran regarding its nuclear capabilities. The more it does that the more that invites oil price speculation. Second, Israel increasingly fears a nuclear Iran and is rumored to want to bomb its facilities. If it does that then expect oil prices to skyrocket. Last week when Prime Minister Netanyahu visited the United States he appealed to Obama to support them in a possible bombing of Iran. If Obama does that, again, oil goes up. If the president does not support Israel then he runs the risk of alienating Jewish voters, and in swing states such as Florida that could prove costly. 

Obama’s trilemma: How to contain Iran and support Israel, depress oil gas increases (which can also hurt the economy), and promote his reelection? This is not an easy feat to accomplish.

What tools does he have to address these problems? Not many. He could again open the spigot to the Strategic Petroleum Reserve similar to what he did in June 2011. However, that decision was coordinated with similar actions with allies around the world and it is not clear they will follow suit this time. Additionally the amount oil released then had minimal impact on oil prices and the same will be true when (not if, but when) Obama opens it again this year. The only issue is when he will do it. Open to early it has no lasting impact, open too late and it may have no political or economic efficacy.

Obama has to do something and he cannot look hapless. This is in part what doomed Jimmy Carter in 1980 when he did not know what to do about the Iranian Hostage crisis. Somehow Obama has to divert America’s attention away from gas prices, or convince them that the GOP have no better ideas regarding what to do (and the latter is true). However, every step along the way the Republicans will be reminding voters that “It’s the gas prices stupid.”

Obama needs advice and help. In 1992 space aliens advised Clinton on what to do about the economy, at least according to the Weekly World News. It seemed to help him then. Maybe that alien can provide Obama with some advice in 2012, instead of offering what appears to be out of this world recommendations to Gingrich and others that they can get gas to $2.50 per gallon immediately.