Are gas prices predictable?

Monday, September 11, 2006

Are gas prices predictable?

Last week, CNN contrarian talking head Jack Cafferty offered this opinion about the link between gas price trends and elections.

"You know, if you were a real cynic, you could also wonder if the oil companies might not be pulling the price of gas down to help the Republicans get re-elected in the midterm elections a couple of months away."

Whether you're a Cafferty fan or not, Jack is simply mimicing what seems to be obvious election year schemes via the pump.

Now that the price of gas is much higher than it was just 10 years ago, the proof of a gas price conspiracy is hard to argue.

Armed with nothing more than a government spreadsheet and a few minutes of my time, it's easy to see a distinct trend between the rise and fall of nationwide prices (for unleaded gas) when linked to election year cycles.

Over the last 10 years, the average rise/fall of gas prices between June and October are directly tied to elections... during off-election cycles, the price of gas always increased from June to October. And on even-ending years (during election cycles), the price of gas always fell from June to October.


Here's what the Bureau of Labor Statitics (the same government department who oversees the reporting of the Consumer Price Index) released for the average price of unleaded gasoline within the United States from 2005 'til 1996:

2006 (Election year)
Sep $2.66
Jun $2.92
8.9% cheaper

Oct $2.79
Jun $2.18
27.9% more expensive

2004 (Election year)
Oct $2.03
Jun $2.04
0.5% cheaper

Oct $1.60
Jun $1.51
5.9% more expensive

2002 (Election year)
Oct $1.45
Jun $1.40
3.5% more expensive

Oct $1.36
Jun $1.64
17.0% cheaper (*same period as 9/11 attacks)

2000 (Election year)
Oct $1.56
Jun $1.62
3.7% cheaper

Oct $1.27
Jun $1.15
9.5% more expensive

1998 (Election year)
Oct $1.04
Jun $1.09
4.6% cheaper

Oct $1.24
Jun $1.23
0.8% more expensive

1996 (Election year)
Oct $1.23
Jun $1.30
5.4% cheaper

Bottom line: While big oil could easily accuse Jack Cafferty as a conspiracy theorist, the facts (and data) show Mr. Cafferty is spot on. The government's own Consumer Price Index for unleaded gasoline reveals the average price of gas declines during election years and increases during off-election cycles... the only exception was the year of the 9/11 attacks.

When you look at the June to October trends above (and remove the 2001 cycle), gas prices averaged an 11.0% price drop during election year cycles and a 4.4% increase during off-election years.

Updated sources:

USA National Gas Temperature Map
A very interesting, color-coded map of average gas prices by geography

Any thoughts on these gas price trends?


Stonedragon66 said...

Nice research, Markus! I'm actually a little surprised that the differences during election years is not more pronounced. It would appear that 2006 may produce the largest difference in the last 10 years. With as many incumbent seats in contention, this is not surprising.

Alice said...

Does this mean you are a Democrat? Or rather, knowing you, a member of the Green Party or other third affiliate?

Markus Allen said...

Alice... I am an American:>

The two-party system is really one... it's a good-cop/bad-cop ruse.

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