Gregg Laskoski is a senior petroleum analyst for GasBuddy.com.
Many of us are losing our patience with the rising price of gasoline and understandably so. The U.S. average price of gasoline has increased by 31 cents in just the past 30 days, and in some states like Michigan the average price for unleaded regular ($3.98 per gallon) has soared by 54 cents per gallon over the same period.
As we read the morning paper or watch the evening news it becomes clear that the media's appetite for the unyielding grip the gasoline story has on us only grows. It delivers everything the media needs: political debate, impassioned consumers, and enough anger on Main Street to ensure the momentum reaches a fever pitch.
Particularly in an election year such circumstances naturally compel candidates to say and do all kinds of things. But for incumbent presidents, rising gas prices always represent extreme danger—the Scylla and Charybdis through which re-election campaigns must navigate but often die.
History shows us that the last five times gas prices spiked in the United States, the incumbent's party lost the election, according to the Christian Science Monitor. The five elections where gas prices had an impact were in 1976, when Gerald Ford lost to Jimmy Carter; in 1980 when Carter lost to Ronald Reagan; in 1992 when George H.W. Bush lost to Bill Clinton; in 2000 when Al Gore lost to George W. Bush; and in 2008 when John McCain lost to Barack Obama.
Since 1976, when the Strategic Petroleum Reserve was created by Congress after the 1973 OPEC oil embargo, the reserve has been tapped only three times; most recently in June last year when President Obama released oil to lower prices when internal conflict in Libya reduced global supply.
It may be worthwhile to note that while crude oil prices and gasoline prices declined somewhat after the June 2011 reserve release, gasoline prices increased in July and remained above seasonal averages through October 2011.
Current logistical problems may make the Strategic Petroleum Reserve's expected relief even more difficult to deliver this year than in the past. Reuters reported that the reversal of the Seaway pipeline, a major Texas-to-Oklahoma pipeline, will reduce the distribution capacity of the Strategic Petroleum Reserve's Bryan Mound, Texas site (its largest source). Additionally, last year some of the reserve fuel made it to west coast (1.2 million barrels) and east coast refiners (1.4 million barrels). But that volume is unlikely to be matched in 2012.
On the east coast, refinery capacity has been significantly reduced by two Pennsylvania refinery closings and a third (Sunoco's Philadelphia refinery) closing slated for July. The three combined represent more than 700,000 barrels per day of lost refining capacity.
The Strategic Petroleum Reserve may provide a measure of relief but tapping that source for price relief in the absence of any supply disruption is likely to yield disappointing returns both on Main Street and at 1600 Pennsylvania Avenue.