Friday, April 21, 2006

Is that all there is?

Heavy Lifting (ht: Jim Miller on Politics) brings us the graph above which charts Bush's approval ratings with the inverse of gasoline prices (the original source is Professor Pollkatz) and comments:

One of my current econometrics students is working on a similar hypothesis, trying to determine which is more important to presidential approval, accumulated U.S. deaths in Iraq or the price of gasoline. While the talking heads and the far left would have us believe it is the former, it is all too likely that it is really the latter.

Is the price of gasoline really the most important criteria by which the American public decides whether or not we approve of our Presidents? Are we that shallow?


Rick Ballard said...

"Are we that shallow?"

U betcha. Ask Gray Davis, he's got plenty of time to answer questions these days.

Fuel prices (and utility bills) are like taxes in the sense that they are felt to be an involuntary 'taking', pretty much out of the control of the consumer. Why not lay it off on the President (or governor)? That's also why our beloved elected representatives go after "greedy oil companies" while slipping our wallets out and raking off a bit more tax revenue.

If the price goes high enough perhaps we'll get some nice shiny new pebble bed reactors out of it. Btw - better that Bush takes the hit than Congress. I understand that he's decided not to run for anything this fall.

I would append dumb to shallow in your question.

Knucklehead said...

I would append dumb to shallow in your question.

I'm struggling very hard these days to keep that word out of my mutterings with my fellow citizens. I swear that at least half the time they know they are being unreasonable to the point of just flat out, jackass, willfully and stubbornly dumb about things.

They wouldn't want to live in the places where gasoline is half the price and in those places that have all the "free" stuff they claim to long for gasoline is much more expensive. I find trying to talk to people excruciatingly frustrating these days.

PDS said...

Rick: I wish you were running for something this fall.

terrye said...

I am not so sure that the Democrats don't know that gas prices have an effect on Bush's approval rating. That is why Dorgan is talking about investigating Exxon...they want to look like they are "doing" something. Especially after their refusal to allow drilling in ANWR.

When the prices on refrigerators or houses or even cars go up, people can just not buy new ones, but gas is something they have to buy. I also think that the whole 70's recession and gas line thing scares people.

It is amazing how many people think a president can change something like this. Obviously if he could Bush would get the price down to a buck a gallon.

MeaninglessHotAir said...

Yes, we're that shallow. Most people don't have the least--not the least--bit of understanding of economics. For them, the President runs everything, is in charge of everything, is the God-King of their dreams. That's human nature. Read the Golden Bough. These ancient beliefs far outweigh any "rational" "democratic" approach to government and attitudes toward government. Fix it Daddy, fix it!--or we'll kill ya. Time for a new Daddy (or is it Mommy?), clearly.

Syl said...

How to win friends and influence people: call them dumb and shallow.

People take their lead from the press. Does the New York Times talk about WHY we haven't had any new refineries in 30 years? (no.) Is the press interested in bashing the oil companies? (You bet.)

When the press and the democrats say bush's approval rating is low because of gas prices, people say--oh yeah--it's Bush's fault. The leader in this country is not the President, not the Republicans, it's the press.

Tell me. Who among the Republicans is out there explaining WHY they support big corporations instead of just letting the Democrats and the press yammer on and on? Do they explain the use that is made of the profits and why profits encourage new exploration and research?

No. The Republicans just know they're right and think everyone else is stupid.

Well, dammit. Inform the public.

And ::newsflash:: most Americans are simply living their lives. Terrye's right (as usual) that the gas prices are an uncomfortable detail they encounter a couple times a week.

I don't think it's so bad that the citizens want it 'fixed'. It's natural and if they want something then the PTB better fix it or explain why they can't.

I watched part of the 1pm show on Foxnews today where this was discussed. A Rep and a Dem fighting it out. That gives us NO information just politics and leaves us as 'dumb and shallow' as before.

brylun said...

Discussing the problem in terms an economist would appreciate, the demand for gasoline (and oil) is inelastic within the price ranges under $5 (or maybe $10) per gallon. There are no substitutes.

But beyond a certain price (I think between $5 and $10/gal) the public will take action to reduce its demand.

And what substitutes are there?

Hybrid vehicles are unproven and may be more expensive when all costs are factored in, because electric storage technology can't compete.

Ethanol isn't cost effective either. And we can't seem to produce enough of it.

Development of ANWR won't help much in the short term. Same for Florida offshore oil. And environmentalists continue to protest. But now is the time to go for these resources.

And reduction in demand doesn't make people happy. Forced lifestyle changes never do.

Quite a quandary.

Knucklehead said...


At what point are ordinary people responsible for thinking about things for themselves? At what point are we repsonsible for reviewing the opinions we are all so righteously entitled to and making a good faith attempt to determine if we're fixing blame where blame belongs or demanding solutions we can't have or wouldn't want if we gave a few minutes thought to the consequences?

Just the other day I heard an intelligent person say, "There's no reason gas should cost more than $1/gal!" What unadulterated gibberish. There's no reason a gallon of gas shouldn't cost more than 20 oz. bottle of ice freakin' tea?!?! Are politicians responsible for educating that person?

terrye said...


For people living in rural areas where nothing is within walking distance except the mail box high gas proces can effect whether or not a young couple can come up with money for new school clothes or the rent for that matter. It is a real drain and they are aware of it daily.

I drive hundreds of miles a week in my job. I fill up my tank 2 or 3 times a week. Now instead of sending me all over the country side.. we can put all these people in nursing homes. But that is even more costly.

It is rather like the people who complain about the drug benefit package and say it is just more big government. Excuse me, but those people are already on medicare and if they can not afford their medicine and they get sicker...just who do people think is going to pay for that anyway?

People just do not think about what is entailed in all of this. All they know is that Bush is an oil man and oil prices are high because he got the crazy people in the ME all worked up. That is how they see it. And if the guy in the White House was a Democrat the Republicans would be making the same kinds of arguments. Remember Jimmy Carter? He made not have been the sharpest knife in the rack...but he was not responsible for the Oil crisis. He paid for it anyway.

loner said...

Politicians in office try to take the credit when things are going well and try to avoid taking the blame when they're not. If most of the public is dumb and shallow (and I don't see this as being in any way indicative of that being so) it's not because they have anything on most of the politicians.

Knucklehead said...

Sorry, Syl, but I'm mighty peeved with my fellow citizens these days. They're pissed off 'cause it cost 'em $45 to fill their car. Fine, nobody likes paying that much money for some danged gasoline. But instead of driving away and pondering what goes into the price of a gallon of gasoline and what it would take to change that for the better, or reduce how much gas they have to purchase their reaction seems to be, "Lynch the president! Deport the Mexicans! Draw and quarter the CEOs! Nationalize the oil industry!"

And Gaia forbid anyone even suggest they might consider thinking about things a bit. Nope, no thinking necessary. Start thumping on somebody until the price of gasoline goes down and then forget about everything until it goes up again. Shallow and dumb is precisely what it is.

Rick Ballard said...

How are we gonna get 'em all up above average if the politicians don't educate 'em?

The pols know what they're doing and they know pretty much precisely what the average mental age of the average voter will be on election day. They shoot for the LCD and they hit it almost all the time. There is no magic to the proposition at all - PT Barnum had it nailed down pretty tight and I don't recall reading that he was extraordinarily well educated.

AS MHA noted "That's human nature.", rather immutable. Human conduct is another thing altogether but education is a rather ineffective means of adjustment. Training is not.

"I wish you were running for something this fall"

Thanks, PDS, but I don't know how to lie well enough to keep people cheerful.

terrye said...


The problem is that about 4 to 5 years ago gas did cost about a buck a gallon. So it does not seem that outrageous to people. I can remember about 3 years ago here in Indiana when the price of gas hit $1.35 the state suspended the tax on gas because people were complaining. Now $1.35 would seem like a gift.

The truth is if it keeps up there is a greater likelihood of a global recession than there is of people adjusting. Incomes are not rising that fast.

Every twenty years or so we go through a sort of oil shock, but this time we have China to deal with. Of course if the prices go up, people will buy fewer goods from China, their economy will slow and they in turn will buy less oil. maybe.

terrye said...

And as for nationalizing the oil companies I don't see that happening, but after Enron and Worldcom [and their ilk] people are not that trusting of CEO's with bonus packages in the hundreds of millions. It is not just about ignorance, it is about seeing all those guys in $3,000 suits and handcuffs getting hauled off to jail.

Knucklehead said...

But Terrye, what does it take to make people stop and realize what they just saw when the guy in the $3000 suit got hauled away in handcuffs? They just saw a guy who got arrested and is being prosecuted for the fraud he committed. The bigshot's doing the perp walk.

Anonymous said...

Semisubmersible oil rigs off the beaches of Ventura and Biloxi. Lets drill in Prudhoe Bay and Tuktoyaktuk, too. Build some cool icebreakers in Vancouver and Seattle to boot.

Nukes humming away.

Oil shale ('cause we need our Anglospheric Western Canadian cousins to get rich, too).


13,000 ton unit trains of rotary coal hoppers each pulled by six SD70MACs leaving the Powder River Basin, one every 10 minutes, 24/7.

Wind farms off Cape Cod, did I mention that? Even if a drop in the bucket, it upsets all the right people, so it must be good.

Of course, Teddy Kennedy could be his very own wind farm. We need proposals from Bechtel and Fluor on that, right now.

Syl said...


At what point are ordinary people responsible for thinking about things for themselves? At what point are we repsonsible for reviewing the opinions we are all so righteously entitled to and making a good faith attempt to determine if we're fixing blame where blame belongs or demanding solutions we can't have or wouldn't want if we gave a few minutes thought to the consequences?


Are you a part of a reality-based community now? I mean I thought capitalism is all about the acceptance of human nature, not wishful thinking about what people should be like.

Rick hit on it. The politicians know how to manipulate. The press knows how to lead. I still think the Republicans could do a helluva lot better at explaining things though. Even Foxnews isn't helping. Well, Cavuto, but people who watch that show already know.

And, you know what? I think it's terribly unfair that Bush is taking a hit for something that he can't control. But we all know that life ain't fair.

terrye said...


Yeah, he got arrested, after he drove up utility rates or after he conspired to drive up stock prices etc. That is what I am saying. There are a lot of people who do not believe the markets are anything other than 6 rich men sitting around a mahogany table.

And they think you are naive if you don't see it the same way.

brylun said...

How is nationalizing the oil companies going to help? I suggest it would have no effect, or most likely it would have a negative effect because of government inefficiency.

If you wanted to have an effect on the price of a barrel of oil you could to suspend free market (supply and demand) operations. One example would be to break international law and take over the oil fields in Venezuela and pump what we need. But whoever ordered that would be held out as an international criminal.

Another way to reduce the price of oil is to increase the supply. I think that now is the time to go after ANWR and Florida, and development of Western oil shale, and challenge opponents with the high gas price argument. Don't you think people will be more receptive to development of these resources when faced with current high prices?

And another way to reduce prices is to reduce the demand. But that's painful.

terrye said...


Truman said that he could not wait until that General {Eisenhower} got in the Oval Office, gave an order and not hing happened.

I am sure if Bush could call the oil execs and shieks and say, "Hey bring down those prices at least until after the midterms" he would do it.

But really, handing out 500 million dollar bonuses to oil execs when people are in an outright panic about oil prices is more than a little crass. The G-7 has even asks that production be increased. Not that makes a lot of difference, but it is not something you see every day.

Syl said...


You MUST get off this envy kick. Take that 500 million dollars and give it back to us. That's less than 2 bucks for every man, woman, and child in America.

I know you're hurting. It's bad and it's going to get worse. But it's not that CEO who's sticking it to you.

terrye said...


It is difficult no matter how you look at it.

I think that a lot of the price increase is due to fear. I really do.

Venezuala, Iran, Nigeria, Chad, Mexico, Saudi Arabia, Iraq, Russia...these countries are known for instability and oil. I think all this nervousness over the possibility of major disruptions and disasters has made the market as nervous as a cat.

Too bad the Brits did not have more oil.

Syl said...


There are a lot of people who do not believe the markets are anything other than 6 rich men sitting around a mahogany table.

And they think you are naive if you don't see it the same way.

Well, tell them the secret.

There's no mahogany table. The room is empty.

Syl said...


I think all this nervousness over the possibility of major disruptions and disasters has made the market as nervous as a cat.

The market doesn't seem too nervous to me. It's actually pretty steady. Mostly going up.

terrye said...


Dammit I want my two dollars. I don't care much one way or the other if the guy gets the money. It is just really bad PR right now. Makes you wonder if the same folks in charge of communications for the WH are in control of press releases for Exxon.

Maybe a gold watch and an island or something.

Syl said...

Couldn't we have predicted this, though?

I remember Apr/May of every previous year. Gas prices shot up!

And a big deal was made of it every year. Especially 2004 (wonder why).

Refineries are switching over to the summer blends.

I think this is a spike and it will come down again in a couple three months....


not as far as we'd like.

The spikes are getting higher 'cause so is the base price.

If we had more refineries we wouldn't get this specific spike each spring.

Syl said...


Dammit I want my two dollars.


Yeah. But how about those taxes you've been paying at the pump too? The govt is raking it in.

No wonder Bush isn't worried about the deficit.

Ooops. Maybe it IS Bush's fault. :)

terrye said...


Empty?? Ah my dear, we will never know who is REALLY running things, but they are there...somewhere....doing something right now.

I heard some analysts on one of those econ shows talking about it and they say the markets are on the verge of panic all the time. Every time some crazy man in Nigeria threatens to blow up a pipeline..bam! the price goes up.

Sometimes I imagine these third world rebels with computers and guns. They calcumlate how much of a threat they need to make and at what intervals to get the maximum effect from the market.

I have to admit. I would love to see it crash. I think that in time we will find alteratives and stabilize the markets, at least I hope we will...but in the meantime it is going to be difficult for a lot of people.

terrye said...


The Deomcrats are talking about a windfall tax on oil companies, if they couple that with a reduction of gas will be interesting to see what Bush says to that. After all, a tax is a tax.

Knucklehead said...


That's my point. They look at the TV pictures of guys getting prosecuted for fraud and they draw the conclusion that the rich guys just do what they want and nobody does anything about it. That's just flat out vapid - a disconnect between what is happening and what they insist on believing.

Syl said...


A tax is not a tax. Each one has its own effect.

The Democrats are just appealing to their base whom they've taught to hate the big oil companies.

(You learned their lesson well.)

If the Democrats were to succeed in lower gasoline tax and taking money from the oil companies (redistribution of wealth), and they won't, the consumer would only get a temporary--very temporary--reprieve.

Gas prices are going to continue to go up. Period. supply and demand. China and India together use as much oil today as the entire world used ten years ago!!
(I learned that on Cavuto).

And the oil companies will lose the money they're putting into exploration for new oil sources and R&D which means we'll be stuck with oil for the forseeable future.

So, the democrats plan will hurt you more than it will help.

terrye said...


And my point is that Enron could drive up the utility rates and costs millions of people God only knows how much money in lost pension funds before they were nabbed.

To a lot of people out there, the question is not whether or not someone will get busted at some point in the future, it is that a few powerful people in powerful positions can manipulate the system for quite some time before anything happens to stop them.

It is like the dot com boom. I can remember analysts saying that there was nothing there to really justify those rising tech stocks, but they kept going up and up and up.

So now a lot of people are suspicious that the oil companies are doing the same kind of thing. I am not saying I agree with them..I am merely pointing out that their concerns are not that outrageous.

terrye said...


I am not saying that I agree with them. I am saying that Democrats could say that they will cut the tax on gas for consumers while price is above a certain level and tax the oil companies for windfall profits when oil prices are at a certain level. When those prices come back down, the windfall tax will end with the windfall and of course they will come back to the consumer and bring back the tax.

When I say a tax is a tax, I mean to the person who is paying it, not the government. Of course it used for different purposes.

I am well aware of the constant rise in demand from India and China. In fact the last time we saw a sudden dip in oil prices was in the mid to late 90's when Asia slowed up buying, then in the last few years they picked up demand again and began to buy more and more.

But production is up too, and so are oil stores. There has been no shortages. The fear is that if the demand continues to grow at the present rate the time will come when it will be difficult for supply to keep up with demand. But oil stores at above average levels right now. The problem is that can change, very quickly. There is the fear.

brylun said...

Most of you are probably too young to remember Jimmy Carter's price controls that resulted in long lines at the gas pumps.

Law of Supply and Demand: If you fix the price of a good below the market value, then shortages and lines will result.

Wikipedia has an interesting article on the 1979 energy crisis for all of you youngsters (It is Seneca the Younger, right? And Terrye, your pretty Easter picture tells all).

terrye said...


I remember it very well, but it was not just Jimmy Carter. He was just the sap in office at the time.

There was that OPEC cartel that was just starting to feel ots oats and after the US supported Israel in '74, they created the oil shock. It was not just the US that was effected. In fact poor countries were hit the hardest. I remember analysts saying at the time that the oil shock and subsequent shortages and price hikes represented the largest trasnfer of wealth in history.

So it was supply and demand with a little help.