There are three numbers that will likely determine whether President Barack Obama gets re-elected in November: the unemployment rate, the Dow Jones Industrial Average, and the price of gasoline.
Unemployment is working against Obama right now, with the weak economy creating too few jobs. The stock market is in the dumps, depressed by the European debt crisis. But gas prices have become a bright spot for Obama, with oil prices down more than $25 per barrel from the highs reached earlier this year, and gas prices are following.
It's impossible to predict oil or gas prices five months from now, but it's not a fluke that they've been heading lower. A weak global economy, like we have now, usually generates less demand for oil. The brinksmanship over Iran's nuclear program was another factor pushing gas prices up, and that tension has somewhat eased.
If those trends continue, it's quite possible gas prices could be well below $3.50 per gallon by November. There's not usually much a president can do to affect energy prices, since they're determined by global demand, the activities of financial speculators, volatile Middle Eastern politics and other unpredictable factors. But for once, Obama can plausibly claim that he has played a role in pushing gas prices down.
The biggest factor may be Iran. A White House review late last year concluded that an embargo against Iranian oil, meant to pressure the regime to give up its nuclear weapons program, wouldn't necessarily drive up world oil prices. For a while, that analysis seemed flawed, since a "fear premium" based on concern about a war with Iran added somewhere between $10 to $20 to the price of oil. Yet the fear premium seems to have evaporated, even though sanctions are due to intensify this summer.
Part of the reason is increased production by Saudi Arabia, which was part of the White House calculation. Libyan oil production has almost totally recovered, following the U.S. and European decision to intervene in the civil war there, which led to the end of the Gaddafi regime and is another plus for Obama. Oil production in Iraq is also surging, with many key reconstruction efforts happening on Obama's watch, another thing he may crow about during the campaign.
Then there's the increase in U.S. oil production, which has largely happened on private lands, with no help from the Obama administration. But Obama has claimed credit for that anyway, and voters may not mind if gas prices keep drifting down.
There are other factors pushing oil prices down that have nothing to do with Obama, such as the slowing economies in Europe and Asia. But the important point for Obama is that a steady increase in oil production capacity has given him more wiggle room to be tough with Iran, with less chance that a standoff will cause increased pain for American motorists. It also suggests that oil and gas prices may not necessarily surge again if Europe's economy recovers or the U.S. economy grows faster than expected.
Obama will still have plenty of problems to contend with by Election Day, of course, since growth seems likely to be marginal at best and the economy could even slip back toward a recession. But driving to the polling place in November may cost a few cents less.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.