With gas prices rising nearly 25 percent in the last three months, The Atlantic published a visual guide to what determines the prices of gas. One conclusion we can make is that the White House has very little say over the final price of gasoline. The Energy Information Administration estimates that the costs of treating, shipping and selling gasoline account for 20 percent of gas prices. State and federal taxes, which are low by global standards, account for another 12 percent. Then you have the price of crude oil barrels -- two-thirds of the price of gasoline -- which is comprised of mostly global demand, global investors and Middle East politics. There's just not very much room for the White House to claw down prices this summer ... unless it tries to start another world-wide recession to reduce demand.
In the short term, both the consumer and the economy will suffer from higher gas prices. First, expensive gas hurts U.S. demand. When we import goods, we "export" money to pay for them. When the price of an import increases, more money escapes the economy, reducing wealth and demand. Second, it can hurt U.S. production. All else equal, rising energy costs make it more difficult, or at least more expensive, to move things and people across the country, and this can show up in companies bottom lines.