Lately I have seen a handful of posts asking the questions to the effect of: Why are gas prices so high now that Biden is president? One post showed a picture of a gas receipt in December with $1.99 per gallon labeled “gas under Trump” and another in early February showing a prices at $2.59 labeled “gas under Biden.” Some of these questions seem to flow out of genuine curiosity. Others seem to be rhetorical claims that when Democrats are in charge prices always rise. Regardless of the intent, questions like this make me curious. Is it true that gas prices rise under Democratic presidents and fall under Republicans? So naturally I decided to investigate.
Before I jump into what I found, let me be upfront about my biases. In my opinion, although there are times when regulation is appropriate, I think it often creates more problems than it solves. Although I wouldn’t call myself a free market absolutist, I do think that efforts to manage an incredibly complex economic system through constant government intervention are usually misguided. So, when forced to pick a side, I generally find myself agreeing with the economic policies that have historically been endorsed by Republicans. That said I have always been a bit skeptical when I hear people crediting/blaming every economic rise and fall to the president. It struck me as absurd back in 2001 when people blamed George W. Bush for a recession that started less than 2 months into his presidency. Similarly, it seemed unfair to blame Barack Obama for the continuing recession during the first few months of his presidency when that had been going on for over a year before he took office. So, when I hear claims like this, my first inclination is to dismiss them.
But, who cares what I think. What does the data say about gas prices? I found a dataset that contains the average conventional gas prices across the US in each month dating back to the end of George HW Bush’s presidency in 1992. I labeled each month according to who was president. Note: I assigned January to the new president since their administration is in place at the end of the month.
To start, I calculated the average gas price during months where each party held the white house. The result was that the average price during during Republican presidencies was $2.028 and the average price during Democratic presidencies was $2.031. This difference was well within the margin of error (the standard deviations were $0.70 and $0.98 respectively which would put the margin of error around $0.05). This means that on average the prices have been about the same regardless of who was president.
One shortcoming of this approach is that it ignores the fact that prices generally trend upward due to inflation, so just averaging over time is going to penalize the party that has had more recent presidents. Although it is unclear who that would hurt more, it makes sense to look a little closer. So, here is what you get when you plot gas prices over time. Note: The red points correspond to Republican presidencies and that blue points correspond to Democratic presidencies.
This reveals that prices were flat for most of the Clinton years before rising at the end of his second term. Prices rose sharply during the Bush years before dropping during the 2008 recession. Obama saw prices rebound from the recession low before dropping during his second term while still ending higher than when he took office. Trump saw fluctuations throughout his presidency including a low in early 2020 (remember March of 2020, that was an interesting month!) followed by a rise that continued into Biden’s term, but that resulted in a modest net decrease. You can see the net changes during each presidency in the table below.
This suggests that Clinton actually saw the largest % change during his presidency followed by Obama and Bush2. Trump was the only president to see a decrease (8%) during his presidency.
One limitation of this sort of approach is that tells us nothing about causality. Just because prices rose during a president’s term doesn’t mean that was his fault. Other factors like wars, recessions, natural disasters and OPEC decisions that may not be the president’s fault can influence the supply and demand of gas and therefore the prices. For example, in the plot above, the rises in gas prices tend to correspond to periods of strong economic growth and the drops correspond to contractions. So, to blame a president for rising gas prices, one would also need to credit the president for the economic growth observed during the same period (and vice versa). It is interesting that the sharpest drops in gas prices occurred during Republican Presidencies, but that is counterbalanced by the fact that those drops coincided with the last three recessions which all started under Republican presidencies. The point is that reality is complicated and there is no perfect way to adjust for the factors beyond economic policy that influence prices.
Since the question that prompted this post is focused on changes early on in a president’s term, one might also zoom in on that transition period to see how prices change when the presidency is changing hands. So, I looked at the time period from October 1st to May 1st containing presidential transitions and to see how prices changed. This window contains the month leading up to the election (at which point the front runner is often clear), the 2.5 month lame duck period as well as the first 100 days of the new president’s term. Here is what I found:
It looks like prices fell slightly during the Bush1-Clinton and Bush2-Obama transitions, rose slightly during the Clinton-Bush2 transition, and rose sharply during the last two presidential transitions. Excluding the current transition period (which is still incomplete), if anything this suggests that prices have fallen when Democrats were ascendant and risen when Republicans were elected, but I don’t think this is nearly enough evidence to draw any strong conclusions.
Based on this analysis, I think the evidence that prices rise under Democrats and fall under Republican presidents is weak at best. In my view, there are a lot better explanations for why gas prices are higher right now (e.g. increasing demand related to the trajectory of the pandemic and shortages caused by weather interfering in the energy sector) than the party affiliation of the president. There are plenty of legitimate reasons to criticize the Biden administration, starting with the way his policies will effect religious liberty, but I don’t see the fact that gas prices have risen as one of them.
PS. This is not to say that the president cannot affect gas prices. Trade policy, tax policy, diplomacy, etc. certainly play a role. But if we are going to have a good faith discussion about these matters, we need to move past "democrats bad" and "republicans good" (a claim that on this issue does not seem to be supported by the evidence) and actually understand which policies (especially at the state level) are driving price changes and actually address the tradeoffs involved in those policies.