Can Presidents Change Gas Prices?

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Kevork Djansezian, Getty ImagesBy Charles Riley

HONG KONG (CNNMoney) -- A disagreement over gas prices and energy policy produced a heated tit-for-tat argument between Mitt Romney and President Obama at the second presidential debate.

Romney suggested the president's policies have restricted energy development on federal lands. Obama disagreed. Both stuck to their political talking points.

But neither candidate really addressed the original question: Should the government -- and specifically the Department of Energy -- be working to reduce the price of gasoline?

By casting the question aside, both candidates managed to avoid making a specific promise about gasoline prices.

The truth is that politicians and the government, for the most part, have very little real control over gasoline prices.

The price Americans pay at the pump is tied to the crude oil market -- a global system largely beyond the reach of Washington.

It's certainly true that prices -- now about $3.75 a gallon on average -- have risen since President Obama took office.

When Obama took office, the country was mired in a terrible economic contraction. During recessions, demand for gasoline plummets as trucks pull off the road, companies cut back on travel and laid off workers drive fewer miles.

And since early 2009, the economy has haltingly improved, and demand for crude has risen. It has also spiked in the developing world -- especially in China, India and South America.

It's a point Obama was eager to make.

"When I took office, the price of gasoline was $1.80, $1.86. Why is that?" Obama asked. "Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression."

The Strategic Petroleum Reserve is one tool the president does have at his disposal.

The SPR is located in man-made underground salt domes in Texas and Louisiana. It holds around 727 million barrels of oil. Many analysts say the reserve should only be used in case of an actual shortage of oil, not simply to lower prices.

In June, Obama tapped the stockpile and released 30 million barrels of oil from the SPR, citing a disruption in supply from Libya. The move was done in conjunction with other developed nations and ultimately put 60 million barrels of fuel on the market over the course of a month.

The decision was viewed by many analysts as a political one. And really, that's one of the few options the government has to lower prices.

While increased oil and gas drilling in the United States may create good-paying jobs, reduce reliance on foreign oil and lower the trade deficit, it would have little impact on gas and oil prices.

That's because the amount of extra oil that could be produced from more drilling in this country is tiny compared to what the country -- and the world -- consumes.

Plus, any extra oil the United States did produce would likely be quickly offset by a cut in OPEC production.

According to a 2009 study from the U.S. Energy Information Administration, drilling off the East Coast, West Coast and the west coast of Florida would yield an extra 500,000 barrels a day by 2030.

The world currently consumes 89 million barrels a day, and by then would likely be using over 100 million barrels.

After OPEC got done adjusting its production to reflect the increased American output, gas prices might drop three cents a gallon, the study said.

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259 Comments

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Sekinu2

It is a very simple answer. Yes most definately a president can change the price of gas. No if ands or buts.

October 19 2012 at 7:07 PM Report abuse rate up rate down Reply
songbirdgray

YES, BY LETTING US DRILL FOR OUR OWN OIL AND THE KEYSTONE PIPELINE WHICH OBAMA STOPPED , WOULD HELP US TO BE ABLE TO GET OUR OIL CHEAPER AND CRATE A LOT OF JOBS, THE PRESIDENT HAS ALOT TO DO WITH THE GAS PRICES IN THIS RESPECT.

October 19 2012 at 2:35 PM Report abuse rate up rate down Reply
liemc

It\'s not all a legitimate supply/demand side problem. Just the threat of supply disruptions create a market for speculators to unduly influence the upward price of crude oil, thus the price of gasoline. This is why the Keystone pipeline, which would bring millions of barrels of oil to the US from Canada, is so important. When a bomb goes off in the Middle East or Hugo Chavez (Venezuela) starts talking crazy OPEC crude prices spike. However, we havn\'t had a conflict with Canada since the French & Indian wars of the 1760’s, hardly an environment that\'s subject to speculative price spiking. Canada, our friends, have a lot of oil & the US has a demand for that oil, it’s a perfect match; right? Wrong, the Obama administration has done everything it can to block this vital project because lower gasoline and overall energy prices weakens his \"green\" agenda argument.

October 19 2012 at 2:32 PM Report abuse rate up rate down Reply
abourge458

Interesting little tidbit >>>>>>>>>>>>

The Mercury News offers this:

“In 2006, when asked if Bush could reasonably do something to bring down gas prices, 73 percent of Democrats and 47 percent of Republicans said he could, according to a Washington Post/ABC News poll

. When asked the same question of Obama this year, the results reversed: 33 percent of Democrats and 65 percent of Republicans said the president had control of gas prices.”

October 19 2012 at 2:30 PM Report abuse rate up rate down Reply
wheresmyfreemoney

The inscription on Barack's headstone will read." It wasn't my fault, it was Bush's . "

October 19 2012 at 1:58 PM Report abuse rate up rate down Reply
jj2301

Bush got the blame, so let's use the same yardstick here. Yes, this is Obama's fault.

October 19 2012 at 1:46 PM Report abuse +1 rate up rate down Reply
1 reply to jj2301's comment
wheresmyfreemoney

I believe when Barack die he's going to have this inscription on his head stone. " All this is Bush's fault some how."

October 19 2012 at 1:56 PM Report abuse rate up rate down Reply
utmccall

This is the biggest lie ever told to America. The price of overseas crude today should not effect the prices at the pump tomorrow. The law of supply and demand has been thrown out the window because Big Oil is greedy, politicians take money from Big Oil, and Americans are spoiled.
Big Oil companies are are profiting $10 million a quarter! The government will not step in and do anything because their pockets are being lined with some of this.
Fellow Americans, it is time to stand up to Big Oil and the politicians who support it.
I wish people would read history, the fall of every major world power from the beginning of time had two things in common, greed and immorality. America is on the same path but it is not too late to change it.

October 19 2012 at 1:15 PM Report abuse rate up rate down Reply
1 reply to utmccall's comment
wheresmyfreemoney

Obama supports big oil or he would have lost his re-election campaign contribution.Romney will also accept cotributions from big oil. Big Oil has had politticians on a puppet string for years.

October 19 2012 at 1:44 PM Report abuse rate up rate down Reply
skylinegra

Oil speculation counts for about $ 25 per barrel of oil. If Obama announced tomorrow thats ALL federal lands were open for drilling and OK'ed gas refineries, oil would drop $ 20 a barrel in 2 weeks. So, yeah, they can !!!

October 19 2012 at 1:02 PM Report abuse rate up rate down Reply
1 reply to skylinegra's comment
James Gray

On what planet are you speaking from...this is PLANET EARTH. If presidents could control gas prices, prices would be at "5 cents" per gallon at eact election time.

October 19 2012 at 1:39 PM Report abuse rate up rate down Reply
Bonnie

Demand for oil goes down if fewer refineries are available to turn oil into gasoline. The EPA is closing refineries through regulations. Fewer refineries that turn oil into gasoline drives up the cost of gas at the pump.

October 19 2012 at 12:57 PM Report abuse +1 rate up rate down Reply
Tom

Thats funny , I wonder why this article was not printed when GWB was President and the liberals were screaming that he was helping his " BIG OIL BUDDIES " . Was there a change ? No just the liberal press at their worst

October 19 2012 at 12:42 PM Report abuse +1 rate up rate down Reply
1 reply to Tom's comment
abourge458

The Mercury News story also offers this:

“In 2006, when asked if Bush could reasonably do something to bring down gas prices, 73 percent of Democrats and 47 percent of Republicans said he could, according to a Washington Post/ABC News poll. When asked the same question of Obama this year, the results reversed: 33 percent of Democrats and 65 percent of Republicans said the president had control of gas prices.”

October 19 2012 at 2:29 PM Report abuse rate up rate down Reply