Signs of cheaper gas could brighten Obama campaign

Reuters News

4/23/2012 4:05:56 PM - Reuters News

By Alister Bull

WASHINGTON (Reuters) - New signs of lower U.S. gas prices could give a boost to President Barack Obama's re-election hopes and blunt a potent weapon that Republicans have used to attack him.

News on Monday of a month long delay in the planned closure of the largest refinery on the U.S. East Coast was the latest indication sky-rocketing gasoline prices may have peaked.

Industry experts say keeping Sunoco's Philadelphia refinery open will ease supply concerns and help underpin a gradual decline in gasoline prices during the summer.

That, in turn, would ease a burden on the U.S. economy that Republicans have seized upon as one of their best bets of thwarting Democrat Obama's bid for re-election.

The White House says the president has limited ability to curb the global price of oil, which is the key determinant in the cost of gasoline, blaming geopolitical tension and stronger growth in places like China and India.

But that does not keep gas prices from being an issue in the run-up to the November 6 presidential election.

"Gas prices are a very politically potent indicator," said Karlyn Bowman at the American Enterprise Institute in Washington. "One of the things most visible to (Americans) is gas prices. And should those go down, or remain stable, that has to be good news for the administration."

Obama currently gets some of his lowest poll marks for his handling of energy prices, which have been buoyed by tensions in the Middle East, including concern that Israel may attack Iran to destroy its nuclear program.

An NBC/Wall Street Journal poll last week showed Obama ahead of likely Republican challenger Mitt Romney by 6 percentage points but voters rated Obama lower than his rival on handling of the economy.

Republicans show no intention of suspending attacks on the president's energy policies, even though prices at the pump have moderated.

"Until we are at the point where people don't feel like they're squeezing their entire paychecks into the gas tank, it's an issue that Republicans are going to keep talking about," said a Senate Republican aide.

"Prices are still really high. People are still paying a lot more to fill up than they can afford," the aide said.

'PRICES WILL COME DOWN'

Gasoline prices did not show an immediate reaction to news that Sunoco would delay shuttering the 330,000 barrel-per-day Philadelphia refinery and had entered talks that could potentially spare it from closure.

"Prices will come down. They have started to come down and we will see them come down. But they come down slowly," said Philip Verleger, an economist who specializes in energy and has advised both Republican and Democratic administrations.

American Automobile Association data show that U.S. gasoline prices currently average $3.858 per gallon, compared with $3.907 a week ago and $3.892 a month ago.

Obama could certainly use the help of lower gasoline prices. Recent U.S. economic data has been mixed, including a disappointing employment report in March, and the U.S. recovery remains vulnerable to another bout of volatility stemming from Europe's sovereign debt crisis.

The surge in gasoline prices toward $4 a gallon this year sapped consumer spending and hurt confidence among Americans, many of whom rely heavily on their cars and have no easy way to avoid escalating prices at the pump.

"It is the most visible price in the United States," said William Galston, a senior fellow at the Brookings Institution in Washington. "It is in your face, literally as you drive down the street every day."

(Additional reporting by Richard Cowan; Editing by Bill Trott)