5 myths about gas prices, Big Oil, and the presidency

Our national discussion on uncomfortably high gas prices is filled with exaggerations and distortions. It's time we wised up

When it comes to presidential elections, gas prices aren't as important as you think. Sure, they're a relevant data point, but a study by Yale economist Ray Fair shows that dating back to 1948, there is little correlation between election results and your pain in the gas.

Take 1992. Gas prices were at their lowest levels in decades. The economy was pulling out of a recession. And the president had just won a war in convincing fashion. What happened next? Voters gave President George H.W. Bush the boot.

Fast forward to 2004. The economy was again pulling out of a recession — but gas prices were at their highest levels in decades. What happened next? President George W. Bush was re-elected.

The view that gas prices are the end-all, be-all data point in an election year is plainly a myth.

Say what? One president loses when prices are at record lows ($1.77 in today's dollars for Bush Sr.), but another wins when they're at a multi-decade high ($2.26 for Bush Jr.)? 

Fair's study shows that the critical factor isn't gas prices themselves, but the sense Americans have (or don't have) that the economy is getting better. Today, Americans believe things are getting better. The unemployment rate has fallen for five straight months. The rate of economic growth is picking up. Consumer confidence is on the rebound. This bodes well for the president — for now.

Of course, gas prices are one part of this overall perception. (What other product's price is so obviously in your face every day?) And if per-gallon prices pass the psychologically critical $4 level, which they likely will very soon, expect a drumbeat of stories and sound bites from folks saying how tough things are. But here's the real danger for Obama: If gas prices rise long enough and high enough, they will hurt economic growth — and his fortunes in November. But with eight months to go, and at $3.71 a gallon, they are not enough — again, for now — to outweigh the larger sense that things are improving. 

The view that gas prices are the end-all, be-all data point in an election year is plainly a myth. And when it comes to oil and gas, there are plenty of others. Here are five:

1. Gas prices rise every summer because oil companies gouge us
It never fails. Just as the summer temperatures rise, so does the price at the pump. What a rip-off... or is it?

Most Americans don't know that gas is made of different ingredients in winter than in summer. In winter, a cheap additive, butane, makes it less expensive to fill 'er up. But in hot weather, butane evaporates. Refineries must replace it with other, more expensive ingredients. So blame chemistry, not conspiracy, for higher summer prices. This didn't keep a wily politician like Obama from blaming Bush when prices soared four years ago — and it certainly hasn't kept Republicans from blaming Obama now.

2. We get most of our oil from the Saudis
Newt Gingrich says that if he becomes president, he'll never bow to Saudi Arabia. The implication, of course, is that we're heavily dependent on Riyadh for oil. That's not quite right. Gingrich "the professor" knows full well that our top suppliers are Canada and Mexico. For national security and economic reasons, U.S. oil supplies are well diversified.