Political Pulse April 2006

Pumped-Up Prices

President Bush sounds worried that his party could pay for high gas prices at the polls. He should be worried. Those hit hardest by high gas prices say thay plan to vote Democratic in the fall.
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Gas stations are becoming the hot new political prop. Sen. Charles Schumer, D-N.Y., held a press conference at one in New York City last week, pointed to the posted-price sign, and said, "It's a beautiful morning. It's beautiful in every way, except for those signs. The price of gasoline is going up, up, up."

As if things weren't bad enough with gasoline at $3 a gallon, there have been spot shortages at gas stations along the East Coast. And the peak driving season hasn't even started. According to Phil Flynn, an energy analyst with Alaron Futures and Options, "What we are seeing here, with oil prices at an all-time high and demand running strong, is gasoline supplies evaporating almost overnight. It will be a difficult summer."

President Bush raised the issue at his April 18 press conference. "We're dealing with a war on terror; we're dealing with high gasoline prices," he said, appearing to equate the two challenges. In an unusually extensive analysis, Bush cited three reasons for the price hike: "One, the increase in the price of crude oil.... Secondly, there's increasing demand. At this time of year, people are beginning to drive more.... Thirdly, we're switching fuel mixes. The summer fuel mix is different from state to state."

It sounds like the president is saying, "Hey, it's nobody's fault." Many analysts are inclined to agree. "The biggest factor in the price increase right now is supply and demand," said David Sandalow, environment scholar at the Brookings Institution. "There is huge, increasing demand in China and the U.S."

Poppycock, say Democrats. "A 30-cent increase is hard to explain strictly by the laws of supply and demand," Schumer argued.

The Democrats' theory? Somebody's up to no good. Senate Minority Leader Harry Reid, D-Nev., sent a letter to Bush demanding a federal anti-price-gouging law. The letter maintained, "It is often the large, vertically integrated oil companies that dictate the price that gasoline retailers can charge." Fourteen other Democratic senators, including Hillary Rodham Clinton of New York, signed Reid's letter.

Democratic Sens. Frank Lautenberg and Robert Menendez of New Jersey wrote their own letter to the president, urging him to file a complaint against OPEC with the World Trade Organization for violating the organization's ban on export quotas. The senators released the letter at a news conference at a gas station in Fort Lee, N.J.

And Schumer? "I have asked the Federal Trade Commission to do an investigation quickly and speedily to see if the oil companies are taking advantage of natural and cyclical forces to keep the price high," the senator said, standing under the gas sign.

Bush was worried enough about the issue to add a fourth factor that he said might be worth looking into. "The government has the responsibility to make sure that we watch very carefully to investigate possible price-gouging," the president said last week. Later in the week, he announced an investigation into possible price gouging.

Sandalow said, "Looking for more information on this topic is not a bad idea." But in his view, "The best thing we could do to get oil prices down in the medium term is to have more fuel-efficient cars.... It is simply a fact that our rising transportation fuel usage is driving prices up for fuel all around the world."

Bush sounds worried that his party could pay for high gas prices at the polls in November. He should be worried. In this month's ABC News/Washington Post poll, 43 percent of voters who say the rise in gasoline prices is not causing them financial hardship intend to vote Democratic, while 53 percent of those who say gas prices are causing "some hardship" plan to vote for Democrats. And 64 percent of those who say gas prices are causing "serious hardship" say they will vote Democratic. When the poll was taken, April 6-9, 44 percent of Americans called gas prices a serious hardship, a number that is likely to rise, especially if more of them start finding gasoline difficult to obtain at any price.

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William Schneider is the Cable News Network's senior political analyst. He is also a resident fellow at the American Enterprise Institute in Washington, D.C., and a contributing editor for the Los Angeles Times, National Journal, and The Atlantic Monthly. His column appears every week in National Journal, a weekly magazine covering politics and government published in Washington, D.C.

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