Patrick De Haan, head of petroleum analysis at GasBuddy, says that U.S. presidential elections and policies don’t change the short-term price of gas at the pump. This may come as a surprise to some.
But in the long run, things are different, because policies, like those that encourage people to buy electric cars, often have effects that are “years in the making,” he said.
GasBuddy showed a graph of average U.S. gas prices during election years. On Thursday, De Haan said during a webinar that the graph shows prices have “really been all over the map.”
He said there aren’t many things that are the same about these election years.
He said that the COVID-19 pandemic had an effect on Donald Trump’s presidency because it caused gas prices to drop because fewer people were buying it. Then, when the economy started up again in 2021, the first year of Joe Biden’s presidency, demand went up, which drove up the price of fuel. The war between Russia and Ukraine in 2022 caused prices to “super spike.”
‘Bottom line is that there’s not a whole lot of similarities between these election years and so the conclusion we draw is gas prices don’t really care about elections.’
Patrick De Haan, GasBuddy
“In the end, there aren’t many similarities between these election years,” De Haan said. “That means that gas prices don’t really care about elections.” “Some years they are low.” Other years, they tend to be high.
Presidential policies
De Haan said that presidents and their administrations “never have much of a short-term effect on gas prices.” He also said that it takes a long time for presidential policies to have an effect.
Among the Biden administration’s actions were the cancellation of the Keystone XL pipeline and a federal ban on oil drilling. These actions caused gas prices to “go down a different road,” as he put it.
But effects may not show up for years. Prices might be higher in five to ten years, but De Haan said that policies like those don’t really change the day-to-day changes.On the other hand, the market may not get the long-term effects they thought they would from the president’s oil policies.
Biden said he would stop drilling on federal land, but De Haan said that about 80% of U.S. oil production takes place on private land and that the ban only applied to future drilling, not current drilling.
He said that in the last few years, U.S. oil producers have raised oil production to record highs, with the country now producing about 13.3 million barrels of oil a day.
In what has been called a “drill, baby, drill” promise, Trump has talked up his plans to increase oil drilling.
De Haan said that the president can’t run the private U.S. oil companies because they are private. He said that in places like Saudi Arabia and Russia, on the other hand, oil companies are owned by the government. This means that those countries’ governments can tell oil companies how much to produce.
Besides that, he said that oil CL.1, -0.15% BRN00, -0.13% and gasoline RB00, 0.47% are mostly global goods.
De Haan said, “It’s silly to think that one president could set the price of a global good.” The price you pay at the pump is more like “kind of a scale,” with demand on one side and supply on the other.
Still, he said, there is one big difference between the presidential candidates that is a “very big wildcard” for the fuel market: how they plan to handle electric cars.
Elon Musk is the CEO of Tesla Motors TSLA, 3.83% and Trump has tried to “cozy up” with him. However, De Haan said that Trump has also been a “champion of internal combustion engine vehicles.” On the other hand, Biden has been pushing Americans to try to buy EVs more quickly.
Some analysts are worried that the strong growth in demand for electric vehicles (EVs) will cause gasoline use to slow down.
Gas prices
According to De Haan, gas prices probably won’t change right away after the results of the election are made public.
But it’s likely that gas prices will go down in the fall.
“That has nothing to do with the election,” he said. “It has everything to do with the fact that Americans start driving less in the fall.”
“Gas prices go down when the weather gets cooler,” De Haan said. Also, remember that the switch back to cheaper winter gasoline is coming up in just two months.
It was $3.53 a gallon on average on Friday morning, according to GasBuddy. This was up 4 cents from the week before and only 1.1 cents more than it was a year ago.
