In an election year reminiscent of George H. W. Bush’s 1992, recent polls reveal President Obama’s sudden drop in approval ratings can be directly tied to the economy, but more precisely, to gasoline prices.
Three polls conducted in March show the President dropping sharply among those who approve of his performance, with the NY Times/CBS News poll registering the lowest and most dismal 41 percent approval rating. Sign-up for my 100% FREE Alerts
Details of the three surveys strongly suggest that Americans, though still upset about the lack of well-paying jobs, are most angry about rising gas prices—which have risen to levels hovering $4.00 in many states.
Republican consultant Mike Murphy told Bloomberg News that on top of a stalled U.S. economy and disappointing jobs picture, gas prices are destroying an already-tight family budget.
“I think the President suffers from a lack of public confidence in his economic leadership,” Murphy stated in an email. “Any bad economic news, in this case soaring gas prices, triggers a fast decline in his numbers. He lacks any reserve of support on economic issues to fall back on. This is a definite sign of political vulnerability.”
Not unlike the Operation Desert Storm of 1990, oil prices are expected to rise sharply if the U.S. executes a military strike on Iran, which would then not surprisingly lead to even greater economic woes for a troubled U.S. economy. Some have even suggested that a spike in the price of oil to the $150 – $200 per barrel level this year could finish the U.S. economy, leading to a dollar crisis.
Economists strongly believe that escalating gasoline prices pushed the U.S. economy into recession in 1991, torpedoing any chance of a second term for George H. W. Bush. Undoubtedly, the politically battered Obama doesn’t intend to make the same mistake.
—Obama’s plan to crush gasoline prices in time for the Fourth-of-July weekend
On Mar. 24, not-for-profit International Movement for a Just World reported that preliminary U.S. government data show a 25 percent jump in oil imports from Saudi Arabia, “the highest level since mid-2008.”
“The White House has been scrambling for options to bring down gasoline prices — at a seasonal record high — during an election year, after concerns over an Iranian supply disruption launched benchmark Brent crude to over $120 a barrel not seen since the record price run of 2008,” according to the article’s authors Matthew Robinson and Jonathan Sau.
“Washington has urged ally Saudi Arabia to cover potential shortages when new U.S. and European Union sanctions are expected to reduce Iranian oil exports from July,” Robinson and Sau added. “The Obama administration has considered releasing strategic oil inventories, potentially as part of a bilateral deal with Britain.”
How much oil the U.S. ultimately intends to stockpile cannot be known, yet. But, so far, the number of barrels in play appears to be rather significant, which, ironically, makes a strong case for U.S. stockpiling contributing to the recent rally in WTIC above the $105 level, a level that could be unwound at more fortuitous time for the President.
Robert Fitzwilson, founder of boutique investment firm The Portola Group told King World News on Tuesday that, quietly, the U.S. is importing millions of barrels of oil in addition to its regular shipments from Saudi Arabia.
Fitzwilson speculates that the additional imported barrels could be used in the event that the Strait of Hormuz is closed during a military strike on Iran, or could be used to prepare for sanctions imposed on Iran to fully shut out the nation’s three-million barrels per day of production come the July 1 deadline for Iran’s customers to make other arrangements.
“Saudi Arabia is suddenly sending 22 million barrels to the United States. Why did they do that?” Fitzwilson asked rhetorically.
“Are they trying to get paid for it before there is some sort of eruption in the Middle-East? Is the U.S. stockpiling oil ahead of war?”
Contrary to a growing consensus, war with Iran, if it actually happens, may not be executed until after the U.S. elections. With the Fed expected to formally announce additional purchases of Treasuries and Agency debt in the coming months, a double-whammy response to the oil price from further dollar debasement and a war with Iran would usher a new president in as fast as President Bill Clinton was swept into the presidency in 1992.
A scenario, the one proffered by commodities guru Jim Rogers, of a relatively calm 2012 commodities market, with economic Armageddon reaching the U.S. in 2013, would make much more sense for a sitting president than an obvious $6 gasoline kiss of death during an election year.
“This is an election year in the United States, and a lot of politicians want to be re-elected,” Rogers told Opalesque Radio on Mar. 22.
“You should worry about 2013, you should be very worried about 2014, but this year, more or less, is not going to be so bad,” he added.
As expectations for record gasoline prices slated for this summer abound, President Obama, not only wants to continue talking about high energy prices during the campaign year, so he says, but he may also want to control the dialogue of gasoline prices with the American people all the way up to the Fourth-of-July weekend, at which time he simultaneously floods the oil market with the U.S. oil stockpile and makes peaceful overtures with Iran.
The Rogers scenario of a relatively quiet commodities market for 2012 just makes more political sense, assuming, of course, a Nassim Taleb Black Swan doesn’t spoil the plan.
Unlike the relatively thin gold market, whereby naked short selling can push the price of gold down during lulls in overseas trading, the oil market is much too big and deep for JP Morgan’s manipulation tactics to have any meaningful effect on the price.
Instead, that’s where the quiet stockpiling of oil can be then dump to trigger stop-loss orders in the futures pits, squashing the oil price with the physical commodity in conjunction with an orchestrated temporary cooling of tensions in the Middle East. Gasoline prices will follow the oil price down.
Then . . . the coast will be clear for the disaster of 2013. Sign-up for my 100% FREE Alerts