Gas Prices on Mind of Primary Voters

Gas prices have steadily risen a few pennies per week. Now, the average price is $3.60 per gallon nationwide. In some parts of the country, gas prices have already topped $4 dollars per gallon. Oil prices are up 25 percent since the start of the year. A week from now, voters in Indiana and North Carolina head to the polls for their primaries, and gas prices and the economy are on people's minds.

Copyright © 2008 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

MELISSA BLOCK, host:

We heard Don Gonyea mention high gas prices there. And the price at the pump is very much on the minds of voters in Indiana as well.

Our co-host Michele Norris was traveling across Indiana today.

MICHELE NORRIS, host.

Here in Indiana, the Howey-Gauge Poll released today found that rising gas prices are now a key issue driving voter's decisions. Michael Davis is the president of Gauge Research.

Mr. MICHAEL DAVIS (President, Gauge Market Research): There are a good group of voters out there that are just scared of what they're seeing in this country right now - for example, gasoline prices. We did our statewide poll back in February, 1 percent. Today, gasoline prices registers at 12 percent as the top-of-mind issue amongst voters. And those voters are very interested in coming out to vote. They…

NORRIS: We talked with voters today as they filled up their tanks. Our first stop was in Greenwood just outside of Indianapolis.

Mr. MATT JOHNSON(ph) (Resident, Indiana): My name is Matt Johnson and I'm a finance rep. And I drive about 40 minutes to work every day and 40 minutes back.

NORRIS: Johnson hasn't settled on a candidate yet, but when he does, gas prices will be a top issue.

Mr. JOHNSON: I'll say it's in the top three, definitely. For me, I always - because I have to drive so far to work.

NORRIS: So are you driving less? Are you doing other things, cutting down on things, to make up for the money that you're paying for gas?

Mr. JOHNSON: I try to make stops on my way home, or at lunch I can walk to the grocery and get a few things. I don't like to drive that much so I try to avoid it at all costs.

NORRIS: Matt Johnson would like to trade his Ford Explorer for a smaller car, but he says no one's buying SUVs these days. He spent $68 on gas this morning. And with that long commute, to and from Bloomington, he'll likely be back at the pump by Thursday.

(Soundbite of traffic)

NORRIS: A few miles down the road in the town of Waverly, a BP station is just off State Road 37.

Ms. GEMMA MOGERMAN(ph) (Resident, Indiana): My name is Gemma Mogerman, and I actually drive pretty much around town, but I go up to Indianapolis quite a bit to see family. And I have a brother that I pick up there at the university hospital.

NORRIS: Okay, we've got the pump going there. Gas today is $3.59 a gallon.

Ms. MOGERMAN: Three fifty-nine for regular. That's pretty high, don't you think?

NORRIS: Mogerman said she's supporting John McCain, in part because she likes his plan for relief at the gas pump.

Ms. MOGERMAN: For a long time there's been a lot of excuses, and I think the candidates need to step up to the plate and really fight for America. We need to really look at the ability that America has. I'm just really hoping that this time around that we'll really have someone who really will look for the resources right here in the United States of America.

NORRIS: Patrick Gratehouse(ph) is also at the BP to top off his tank with just a few gallons. He heard that gas prices might be on the rise again.

Mr. PATRICK GRATEHOUSE (Resident, Indiana): I design insulations so I drive everyday. I sometimes fill my tank up everyday.

NORRIS: You have a big primary coming up here in Indiana. Of all the things that - all the issues that you weigh as you make a decision…

Mr. GRATEHOUSE: Mm-hmm.

NORRIS: …where do gas prices rank?

Mr. GRATEHOUSE: Well, last summer, the gas prices went down for the summer here in Indiana. This year, I don't think it's going to go down. I think they're going to sit there and keep pushing it up until somebody offers a solution, and they're probably pointing at one of the candidates going, who's going to make a decision, you know, and who's going to make the promise.

NORRIS: And right now, all the candidates are promising to bring relief at the pump.

I'm Michele Norris along State Road 37 in Indiana.

Copyright © 2008 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Gas Prices Continue Climbing

The cost of gas reached a new high on Tuesday, escalating to a national average of $3.51 per gallon — almost 66 cents higher than the price a year ago. The sharp rise has been driven, in part, by the increase in the cost of crude oil, now near $120, and the declining value of the dollar.

The sticker shock may not end soon. Here's a guide to what's going on at the pump.

What's driving up prices now?

The falling dollar, the transformation of commodity markets into financial markets and steady global demand for oil are all contributing factors, says Mark Zandi, chief economist for Moody's Economy.com and an economic adviser to Republican Sen. John McCain's presidential campaign.

"Given the turmoil in the credit markets, investors are turning to commodities and oil as a trading vehicle," Zandi explains. "It doesn't take a whole lot of money" flowing out of the bond or stock market and into oil or natural gas to drive up prices.

Typically during a recession in the United States, demand for oil falls because people make a conscious decision to drive less. But any decline in U.S. fuel consumption has been offset by greater demand for all kinds of fuel in emerging economies, which Zandi says are doing well and therefore contributing to the price escalation.

Strong global demand is likely to increase, not decrease, pressure on U.S. gas and oil prices. "China, India and other developing countries [that] are developing their economies –and a middle class — just keep putting more pressure on the supply of crude oil to turn into energy for themselves," says Jim Boyd, vice chairman of the California Energy Commission.

Is there any chance prices will fall soon?

No. Gas prices are rising quickly. At the beginning of the year, a gallon cost $3. Analysts and economists view the rise to more than $3.50 as a step along the way to prices that may exceed $4.

Is any relief coming?

Last week in Congress, Sen. John McCain proposed suspending the federal gas tax between Memorial Day and Labor Day this year as a measure of relief for consumers during the height of the driving season. The federal tax is 18.4 cents per gallon of gas and 24.4 cents per gallon of diesel.

The question to ask about such plans, says Billy Pizer, an economist with the Washington, D.C., think tank Resources for the Future, is how much of the money will flow into the hands of consumers versus corporations.

Some economists say that suspending the tax will only promote greater consumption and drive prices up — sending more money to oil producers, not consumers.

Are Americans feeling particularly squeezed because oil is priced in dollars and our currency is weak?

Zandi says the downturn in the U.S. economy, which he believes is in a recession, is taking a toll in a variety of ways.

"Nothing is going right for consumers in particular," says Zandi. "We're losing jobs, the stock market is down. House prices are falling. Gas and food prices are rising. It's all very debilitating, so the higher gas prices hurt more in that kind of context."

Will prices drop once the summer driving season ends?

After summer, gas prices typically do fall — but it depends on the price of crude oil, economists say. In the fall, the problem may shift – especially for consumers in colder U.S. regions —to increased costs for heating homes.

The Southeast, with a larger concentration of lower-income households, is typically hardest hit by rising gas and oil prices because residents spend proportionately more on energy, says Zandi.

Will we ever return to gas at $2 a gallon?

It's unlikely, especially in the near term.

"Every penny increase in the gasoline costs the American consumer $1 billion annually," says Zandi. "If we go from $3 to $4 that means $100 billion in extra cost."

Will the current pricing scenario hasten the use and development of new fuels and vehicles?

As more consumers feel pinched at the pump, their discomfort may spark individual and corporate action. "High prices in the market create responses on both the supply and demand side for fuel," says Pizer. This translates into consumers trying to save gas by driving less or searching for cars with higher fuel economy, he says. On the supply side, companies may turn to conventional sources for fuel that were not profitable in the past because they were difficult to obtain, unconventional sources that may have higher production costs or alternative fuels, he explains.

"I do feel sorry for the American consumer," says Boyd. "We've predicated our lifestyle on almost the God-given right to cheap gasoline. It's a rude awakening — a permanent awakening — we've got to have a mixed portfolio of transportation fuels. And we have to have more efficient motor vehicles."

Why are gas prices higher in California?

Since the early 1990s, to comply with federal law and its own stringent air quality standards, California has produced and utilized a different blend of gas that is more costly to produce. On Tuesday, the California retail price was $3.86, according to the California Energy Commission — 35 cents higher than the national average. Boyd attributes a third of the price difference to production costs. The remainder, he says, is because demand exceeds supply.

Material from The Associated Press was used in this report.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: