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There are few expenses that hit drivers and businesses harder in the wallet than high gas prices. So it caught our attention when a new billboard went up in Milwaukee reminding us of the good old days, when gas was below $2 a gallon.
But the billboard, on 35th St. visible, from westbound Interstate 94, is more than a trip down memory lane. It links high gas prices to the administration of President Barack Obama. This is how it reads:
"Gas $1.85. Obama took office.
Tight drilling regulations. No pipeline.
There’s a smiley face, and the tagline: "Authorized and paid for by WI Business Owner."
Higher gas prices are a familiar complaint of Obama critics. A series of ratings on gas prices can be seen on the national PolitiFact site.
The local message went up on a single billboard during the last week of July, said Mark Rausch, vice president for real estate for Clear Channel Outdoor, the billboard owner. The company charges $6,100 a month for the sign.
Rausch put us in touch with the sponsor of the message, Bret Eulberg, owner of Robert Haack Diamonds, which has stores in Greenfield and Glendale. (There is nothing on the billboard to link the business to the political message.)
Eulberg said customers complain a lot about gas prices, so much so that he gives a $10 gas card to those who sell their gold items to his store.
"I believe the administration has control over the price of oil," Eulberg said. He noted it may be better for the environment if people drive less, but it hurts the economy if businesses and consumers have to spend more on gasoline.
There are really two parts to the billboard’s claim -- the price when Obama took over and that the president is to blame for the increase.
According to AAA, the price of a gallon of gas in Milwaukee was $1.97 on Jan. 20, 2009, the day Obama was sworn in. Nationally it was $1.84, and the Wisconsin average was $1.95. (In contrast, on Aug. 15, 2012, prices were about $3.95 a gallon in Milwaukee, AAA says.)
So Eulberg’s claim on the price is on target. And, he notes, gas was even cheaper in the weeks around the time of the November 2008 presidential election when it dipped to around $1.75 a gallon.
But is Obama responsible for the pain at the pump? This is where things get more problematic.
We evaluated a similar claim from Eric Hovde, then a candidate in the Republican primary for U.S. Senate on May 4, 2012. Hovde claimed that the economic policies of Obama and Congress and actions of the Federal Reserve are to blame for high gas prices because they led to a devaluation of the dollar. We rated his claim Mostly False, because experts say the devalued dollar has only a small impact on how much we pay for gas.
Obama has taken steps to hold up the Keystone pipeline -- as referenced on the billboard -- which would bring oil from the tar sands in Canada to the Gulf of Mexico.
But have those policies led to higher gas prices?
Let’s start with prices in the fall of 2008, when prices were especially low.
Gas and crude oil prices crashed along with the financial markets that fall, said Tom Kloza, chief oil analyst, Oil Price Information Service. Oil prices fell from a national average high of $4.11 in July 2008 to a low of $1.61 on Dec. 30 of that year.
"Oil fell with the financial markets -- there was a massive deleveraging across all asset classes in the second half of 2008 and in much of 2009," Kloza said.
He and other experts say that oil prices are set on global markets and there’s little that the president can do to sway them. He also said there’s been a sharp increase in North American crude oil production.
"I don’t think President Obama can take credit for the explosion in North American crude or natural gas output (which is largely a function of price and technology), but he cannot be blamed for high global crude oil, and by extension, high diesel and gasoline prices within the U.S.," Kloza said.
The price of oil and, in turn gasoline, is determined by international markets and the amount of domestic consumption has little effect. Booming global demand, especially from China, and tension in the Mideast, are far greater factors.
As for the pipleline, that project wouldn’t be completed for years, and it’s impact on today’s oil markets would be minimal.
A billboard sponsored by a local business owner notes that the price of gasoline was much lower when Obama took office -- $1.85 a gallon. That’s about right.
But experts say the president and his policies have little effect on the prices. Demand is skyrocketing in China, and that pushes up prices. There’s been ongoing turmoil in the Mideast. And locally, there have been supply disruptions that have all pushed prices higher. None of these were tied to Obama’s policies.
The blanket claim that Obama is responsible for gas prices doubling gets one part correct: the unusually low price at the start of his administration. The broader claim that Obama is to blame is off base. The statement contains some elements of truth but leaves out critical facts that would give a different impression. That’s our definition for Mostly False.
PolitiFact National,"Gasoline Price Blame Game 2012," March 22, 2012
Clear Channel billboard
PolitiFact Wisconsin, "Eric Hovde says economic policies are what’s making gas prices go higher,"May 4, 2012
Emails, Pam Moen, Assistant Vice President of Public Affairs, AAA Wisconsin, Aug. 15, 2012
Email interview, Tom Kloza, chief oil analyst, Oil Price Information Service, Aug. 14, 2012
Eric Hovde, speech and interview, Milwaukee Press Club Newsmaker Luncheon, April 24, 2012
Milwaukee Journal Sentinel,"Gas prices accelerating past $4 a gallon takes toll,"March 16, 2012
PolitiFact Ad Watch "American Energy Alliance blames Obama for gas prices,"March 29, 2012
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