Countless factors can cause fluctuations in a president's approval ratings, including interest rates, inflation, unemployment, the general health of the economy, whether the country is at war, whether civil or social unrest is brewing, and whether the White House and Congress are addressing what the public considers the nation's most pressing problems.
Energy prices deserve more attention as a factor in influencing presidential popularity than they usually get. We are, as President Bush has pointed out, "addicted to oil." The financial well-being of many American families is seriously affected by swings in the price of oil (in the form of gasoline or home- heating oil); natural gas, which heats more than 55 percent of American homes; and electricity, much of which is generated from oil or natural gas.
Because U.S. workers' real wages have not kept pace with inflation, surges in energy prices hit American wallets especially hard these days. Even though broad economic indices suggest the nation is prospering, high energy prices have helped to drive down -- and keep low -- the percentage of Americans who say the country is headed in the "right direction."
Four years ago, a barrel of West Texas intermediate crude oil traded for $18. On August 30, that benchmark hit $69.91. This Wednesday, it closed at $57.65. Our nation's gradual shift from manufacturing toward a service-sector economy has lessened the impact of energy prices a bit, but those prices continue to play a very important role in the finances of working-class and middle-class families.
To gauge what role energy prices play in Bush's popularity, Tom Gallagher and his team of economists and analysts at the ISI Group, a firm that advises Wall Street and money managers on economics, public policy, and politics, looked at the president's Gallup Poll job-approval ratings in relation to shifts in the monthly wholesale price of unleaded gasoline.
When gasoline prices went down, they found, Bush's approval rating tended to go up, and vice versa. Gallagher's group found a strong correlation -- 0.73, which to statisticians suggests that roughly half of the fluctuation in Bush's approval rating can be accounted for by changes in gasoline prices.
This doesn't mean, of course, that gasoline price increases necessarily caused the president's job-approval numbers to fall. Indeed, in some cases, the forces that boosted gas prices also increased voters' dissatisfaction with the president's performance.
Energy prices have been particularly volatile in recent years, partly because of the war in Iraq, worries about a potential confrontation between Iran and the West over nuclear weapons production, and political instability in Venezuela and Nigeria. The status of Gulf Coast refineries has also affected the price at the pump. Hurricanes Katrina and Rita damaged some refineries. Another refinery, one of the most important, in Texas City, Texas, was out of commission for months after a 2005 explosion. On the plus side, an extraordinarily mild January helped reduce demand for oil.
So, on top of all the other variables that could affect Bush's popularity and that of the GOP as a whole between now and the midterm elections, don't underestimate the potential impact of changes in the cost of energy, particularly the price of gasoline.
At one point last month, energy analysts were predicting that gasoline prices could rise another 20 cents to 30 cents a gallon by summer. In recent weeks, the price per gallon has actually dropped a few cents.
Whichever way the price of gasoline goes, it's worth keeping an eye on if you want to know the direction of Bush's political fortunes.