Friday, September 15, 2006

Death Knell of the Dems?

THE REAL THING. It's not a new idea that Bush's approval ratings seem to have a fairly direct inverse correlation with gas prices. Let me put that in English. When gas prices go up, Bush's approval ratings go down, and vice versa. Even some skeptical lefties have acknowledged the phenomenon, as at this site, where Paul Kedrosky features lots of anti-Bush merchandise but still grudgingly reprinted this graph back in April of this year:

He clearly wants it to be "spurious," but the image speaks for itself, with the two curves acting like approximate mirrors of one another. A serious economist at Heavy Lifting has published analysis of the relationship here, here, and here. He also suspected that the relation between the two was more complex and muddy than the graph makes it appear, and he looked for some additional factor that was causative of both or of Bush's approval ratings in particular. He hypothesized that month by month reports of deaths in Iraq might track more closely with Bush's approval ratings, but they didn't. Then he examined the approval ratings of other key figures in the administration as well as the ratings of Congress and the Democrats. Here's what he concluded:

...approval ratings are more likely to be "caused" by gasoline prices than the war in Iraq. If the Iraq situation was important to approval ratings then the approval ratings of the Democrats would be expected to be positively correlated with OIF deaths as the Democrats consistently speak out against the war, about bringing the troops home, etc. The fact that the Democrat approval ratings are following the same pattern as Bush while Bush/Repubs are on the opposite side of the Iraq issue suggests to this econometrician that the gas prices are paramount.

Of course, it may yet prove that time will undo the correlation, but the Democrats who are so certain they are going to sweep to a majority in the House and Senate should be concerned about this:

Analyst predicts plunge in gas prices
By Kevin G. Hall

McClatchy Newspapers

WASHINGTON The recent sharp drop in the global price of crude oil could mark the start of a massive sell-off that returns gasoline prices to lows not seen since the late 1990s perhaps as low as $1.15 a gallon.

"All the hurricane flags are flying" in oil markets, said Philip Verleger, a noted energy consultant who was a lone voice several years ago in warning that oil prices would soar. Now, he says, they appear to be poised for a dramatic plunge.

Crude-oil prices have fallen about $14, or roughly 17 percent, from their July 14 peak of $78.40. After falling seven straight days, they rose slightly Wednesday in trading on the New York Mercantile Exchange, to $63.97, partly in reaction to a government report showing fuel inventories a bit lower than expected. But the overall price drop is expected to continue, and prices could fall much more in the weeks and months ahead.

The rest of the article explains why the prediction is more than pie-in-the-sky theorizing. Investors in oil futures bid up the price of oil in the expectation of a series of disasters that haven't happened. Now there's way too much oil on the market, which means prices must go down.

Does this mean Bush's approval ratings must go up? No one can say. But the one thing you can be sure of is that every time you fill your tank with cheaper gas in the time remaining before the election, that slight grating sound you hear will be Howard Dean, Rahm Emanuel, Nancy Pelosi, Harry Reid, and all their patriotic brethren gnashing their teeth in dismay.

Drive safely, everybody.

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