Debating the correlation between gas prices and midterm elections.

Daniel Gross' review of the various ways in which the Bush administration could be manipulating gas prices prior to midterm elections was the talk of Moneybox, with some seeing corporate conspiracy where others see the pure economics of supply and demand. 

Noting that "oil has lubricated politics from its earliest days," revrick gives an excellent historical primer on the subject, ranging from John D. Rockefeller's "take over of the early oil industry [with] the willing complicity of the PA legislature and their pals in the Penna Railroad" to "Lyndon Baines Johnson's … ties with Brown and Root, now a subsidiary of Halliburton."

nutrprofe frames falling prices at the pump as a matter of economic interest, with no conspiracy needed for price manipulation:

If I were an oil company official setting gas prices, I would slash them during the election season. This would be a smart business decision. Why? It is in the oil industry's interests to have Republicans in office at all levels. Lower gas prices mean more votes for Republicans. Any temporary loss of profit, even if it runs to hundreds of millions of dollars, will be richly repaid if Republicans stay in control. Lowering gas prices is a better investment than donating money to Republican campaigns, and is exempt from campaign finance laws.

No involvement of the government is needed, just oil companies following their own economic best interest. A conspiracy between competing oil companies is also not necessary. Once one company decides to slash prices, even at the expense of profits, they are undercutting every other company and they must slash prices too. Raising prices in unison would be trickier than cutting them in unison --one company might decide to raise prices less and grab more market share. But no such cooperation is needed for across the board price cuts.

Similarly, brlaub sees no need for "any overt collusion; just a recognition of what best serves the collective interest." Moreover, the "highly concentrated and oligopolistic" structure of the industry would lend itself to this sort of internal strategizing, with "the 'hyphenates' Exxon-Mobil, Chevron-Texaco, etc.) control[ling] every aspect from exploration, production, refining and distribution."

MaxBuff points to "one crucial price driver" unmentioned by Gross: "market traders who bid up the price of crude when its supply is threatened by natural or manmade events":

It would take a real dummy not to notice that prices go up when Bush addresses menacing remarks to Iran or Venezuala or when he stands idly by as war spreads in the Middle East as has happened during the recent Israel-Hezbollah conflict.

It seems that GW and Condi have been models of restraint recently. Bush seems to be supporting the European negotiations with the Iranians and has made no "all options are on the table" remarks. He has ignored the foolish provocation by Hugo Chavez at the UN. He's made no threats recently and, consequently, there've been no price spikes.

C0mmonsense urges us, however,  not to jump on the paranoid bandwagon:

Before we put a lot of stock into 42% of americans believing oil prices have been manipulated let us remember that a signifigant number of americans are still convinced that Lee Harvey Oswald was not President Kennedy's assassin or that there was some larger conspiracy involved in his assassination. Americans seem to feel a need to believe in conspiracies because they are more interesting then the mundane truth that is reality…

Even if the Bush administration did manipulate ALL of the oil companies in the US there is no way they could manipulat OPEC, they don't even like Bush, and if you have been keeping up with the news OPEC has been trying to cut production and get prices back up to where they were as they were enjoying the high profits.

While the link between gas prices and presidential approval ratings is well documented, this graph provides a nice visual illustration of that correlation. AC … 5:11pm