Bloomberg News

Obama Campaign Set for Political Fallout on Gasoline Prices

February 24, 2012

(Updates with Gingrich ad, Santorum remarks beginning in second paragraph under ‘Stronger Economy’ subhead. For 2012 campaign news, see ELECT.)

Feb. 22 (Bloomberg) -- President Barack Obama will try to head off the political impact of rising gasoline prices as Republicans vow to make the price at the pump an issue in the 2012 election campaign.

Obama plans events this week focusing on his administration’s efforts to expand domestic exploration and development of alternative energy sources to combat cyclical spikes in gas prices.

The price rise, driven in part by increased tensions over Iran’s nuclear program and higher demand as the U.S. recovery strengthens, is the one negative in recent economic data that have enhanced Obama’s political position. The cost of gasoline confronts voters daily.

“Gas prices will be the number one issue by summertime,” U.S. Representative Kevin McCarthy of California, the House Republicans’ chief vote-counter, said in an interview.

Obama’s political team has been preparing to counter Republican attacks since the administration denied a permit for TransCanada Corp.’s Keystone XL oil pipeline, White House officials said. The renewed focus on what Obama has described as an “all-of-the-above” energy strategy kicks off with a speech tomorrow at the University of Miami in Florida.

White House awareness of the political impact was illustrated yesterday when the president mentioned higher gas prices at a White House event promoting the extension of the payroll tax cut through year’s end.

Typical American Family

Obama said the $40 increase each two-week pay period for a typical American family “helps to pay the rent, the groceries, the rising cost of gas -- which is on a lot of people’s minds right now.”

The White House press secretary, Jay Carney, came to his daily press briefing armed with statistics about domestic exploration and said Obama favors various forms of energy, including higher fuel-efficiency standards, nuclear reactor development and alternative energy research.

“There are no magic solutions to rising oil prices and the pain that Americans feel at the pump,” Carney said. He said the president is “very aware” of how global oil prices affect U.S. families.

Crude oil for April delivery gained 7 cents to $106.32 a barrel at 11:15 a.m. on the New York Mercantile Exchange. The contract earlier rose to $106.47, the highest since May 5.

Obama’s Message

Obama’s message will draw largely from previous speeches and proposals, officials said. He will attribute elevated prices in part to high demand globally, particularly in China, according to one of the officials, who briefed reporters on condition of anonymity.

He will discuss the steps his administration has taken to increase domestic production of oil and natural gas, raise fuel efficiency standards and promote new construction of nuclear facilities, officials said.

“The United States of America cannot afford to bet our long-term prosperity and our long-term security on a resource that will eventually run out,” Obama said at Georgetown University in Washington almost a year ago.

The average price for regular gasoline at the pump was $3.57 yesterday, according to AAA data. That’s up from $3.17 a year ago. Prices are the highest ever for this time of year before the U.S. summer season, when consumption rises.

Stronger Economy

Rising gas prices aside, other signs point to an improving economy. The Conference Board’s index of U.S. leading indicators rose in January, the unemployment rate declined for a fourth consecutive month to 8.3 percent in January, and claims for jobless benefits dropped in the week ending Feb. 11 to the lowest level since 2008.

The Republican presidential candidates are turning to energy to attack Obama.

Former House Speaker Newt Gingrich said this week that Obama’s energy policies “exist in a fantasy world where we’re all going to end up buying an electric car.”

“His policy has been outrageously anti-American energy,” Gingrich said in an interview on “CBS This Morning.” “The high price of gasoline is a direct result of Obama.”

In advance of a multistate round of primaries on March 6, Gingrich is buying advertising time in key cities for a 28- minute speech entitled “$2.50 per Gallon Gasoline, Energy Independence and Jobs,” according to his campaign.

Environmental Policies

Former Pennsylvania Senator Rick Santorum blames Obama’s environmental policies for helping to drive up gasoline prices.

At a rally last night in Phoenix, Santorum accused Obama of favoring higher gasoline prices to force Americans to drive less as a way to cut greenhouse gas emissions. He said Obama also has “systematic plan” to stifle domestic oil and gas production.

“The president of the United States has done everything possible to shut down energy production,” Santorum said.

While administration officials dismissed Gingrich’s criticism yesterday, the former speaker’s pledge to bring down gas prices to $2.50 a gallon within the first year of his presidency could resonate with voters if gas prices remain high through the November election, said Clyde Wilcox, a government professor at Georgetown University.

“When people really, really notice it, it becomes an issue,” Wilcox said. People “kind of get used to the $3.50 to $3.90 range,” he said.

Canadian Oil

Carney rebutted criticism of Obama’s decision on TransCanada’s bid to build a $7 billion oil pipeline from Alberta’s oil sands to refineries on the U.S. Gulf Coast.

He said that the administration rejected a Congress-imposed deadline, not the pipeline, and that Republicans politicized the issue after being on “the wrong side” of last year’s fight over extending the payroll tax cut.

Carney said U.S. oil production has risen each year since Obama took office and is at its highest in eight years. He said the administration has opened “millions of new acres for oil and gas exploration” as part of a commitment to expand “responsible domestic production.”

The administration’s higher automobile fuel-efficiency standards over a decade will almost double efficiency and cut oil consumption by 12 million barrels, Carney said.

--With assistance from Kristin Jensen in Washington and Julie Hirschfeld Davis in Phoenix. Editors: Joe Sobczyk, Jim Rubin

To contact the reporters on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net; Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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