It seems rising pump prices and an election year are a potent combination as all sorts of people are now commenting on the price of gas, from President Obama all the way down.

What the nation’s politicians wouldn’t give to see signs like the one below this summer as the electorate mulls over who’s deserving of public office and who’s not…

Why? That’s pretty simple.

As goes the price of gasoline, so goes the economy.

As goes the economy, so goes the fate of many incumbents.

And, right now, the trajectory of the price at the pump does not bode well for the latter.

The automobile club AAA said the national average price for a gallon of gasoline jumped 3.3 cents just last night to $3.61 and, this morning, the Energy Department will  release their weekly update on gas prices that will indicate a similar move higher from last week’s $3.52 average.

Sometimes it makes you long for those days in late-2008 when gas prices tumbled to $1.62 a gallon. Of course, back then, the downside to low gas prices was that many thought the world was coming to an end…

With the cost of petrol at a record high for this time of the year, more predictions of $4 a gallon gas are being heard and, with prices already over that mark in parts of the country, $5 signs and $100 fill-ups could be the norm in places like California and New York.

That, and more stories like these, will make voters rather grumpy going into November.

Gas price surge: Up 10% this year – CNN/Money
Obama goes on offense over high gasoline prices – Reuters
Price of gasoline could determine Obama’s fate – MarketWatch
Dem leader Pelosi blames Wall Street for spike in gas prices – The Hill
Gasoline Prices Are Not Rising, the Dollar Is Falling – Forbes
Fear of Iran is inflating gas prices – CNN/Money
Goldman Goes Long WTI – Zero Hedge

All the intrigue is there – everything from the impact on a fledgling economic recovery to a blame game that runs the gamut from Wall Street to environmentalists.

After a recent return to our collective “borrow and spend” ways, everyone’s now worried about rising gasoline prices and whether they’ll take the wind out of the American consumers’ sails as has happened so many times before, leading to a recession. With images like the one below from this LA Times story, somebody better do something fast.

Of course, Bill O’Reilly and Lou Dobbs have been looking into this in recent days and provide this explanation – we’re shipping refined products overseas where they can be sold at a higher price and this pushes supply down (and prices up) here in the good ‘ol USA.

[Note: I don't necessarily agree with the O'Reilly/Dobbs view - I'm simply passing it along.]

We hear a lot about the shale oil boom in this part of the country where, to the surprise of many coming in from out-of-town, gasoline prices are relatively inexpensive at around $3 a gallon (see this item from last week and GasBuddy’s heat map for more on this). This Globe & Mail story about the shale oil boom (that also extends into Canada) touches on some of the other ways in which North American and global energy markets are diverging.

Some analysts believe the growth in production in North America will continue to exceed market expectations and will swamp the mid-continental region with oil, driving down the benchmark U.S. crude, West Texas intermediate, and forcing Canadian producers to accept steep discounts on WTI prices.
…
Combined with lower demand and increased biofuel production, growth in oil output has resulted in a reduction of U.S. imports to 8 million barrels per day at the end of 2011, from 13 million barrels per day in mid-2007. Imports as a percentage of U.S. demand dropped to 45 per cent last year, from 60 per cent in 2005.

In recent report, Citigroup analysts forecast that additional tight oil production could add as much as 3 million barrels per day to U.S. supply by 2020, with the Gulf of Mexico output climbing by another 2 million barrels per day.

In addition to North Dakota’s booming Bakken, more production is expected in Texas’s Eagle Ford and Permian Basin, Colorado’s Niobara, Louisiana’s Mississippi Lime, Ohio’s Utica and the Monterey basin in California, a state that the U.S. Energy Information Administration estimates could hold 15 billion barrels of recoverable reserves, several times greater than the Bakken.

Energy companies are wished good luck in their attempt to begin fracking off the coast of California, though, with the state’s budget situation as it is, maybe it’s not as far fetched as it once was. The Citigroup report went so far as to say that the theory of “peak oil” is now dead, an idea that is more believable when realizing that there are Bakken oil formations in many other parts of the world – not just here in North America.

There’s more talk about $4 or $5 a gallon gasoline this spring, right around the time that we take another 6,000+ mile trip to the East Coast, and, with some of the lowest prices in the nation here in Montana, I wish there was a way to strap on a couple of 75 gallon tanks to the car for reasons that should be clear from GasBuddy’s Gas Price Heat Map below.

Signs indicating $2.99 per gallon or below are a common sight around here.

Amazingly, crude oil was recently selling for just $70 a barrel at the Clearbrook, Minnesota distribution point due to the growing production of Bakken shale oil in this part of the country combined with few alternatives for transporting the stuff to other states. The much talked about Brent-to-WTI spread has recently moved back toward $20 a barrel, but the Brent-to-Clearbrook spread now sits at almost $50!