Gas prices
Joe Raedle  /  Getty Images ifle
The average price paid in the U.S. last week was $1.87 ½ a gallon, nearly 25 cents more than a year ago, according to the Energy Information Administration.
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updated 8/24/2004 12:29:24 PM ET 2004-08-24T16:29:24

As the price of oil neared $50 a barrel last week, an anxious Republican joked darkly that President Bush might want to return to the lucrative oilfields of Texas. Higher prices at the pump, the former administration official added, may give him no choice.

Retail gasoline prices may have slipped back in recent weeks, but in battleground states such as Ohio and other key Midwest states, the cost of a tank of gas continues to inch upwards.

The average price paid in the U.S. last week was $1.87 ½ a gallon, nearly 25 cents more than a year ago, according to the Energy Information Administration. It is a cent lower than at the start of August. The national average price has dropped slightly in 10 of the last 12 weeks.

But gas prices vary regionally and the easing has happened most where it is likely to have the least political impact: California.

Democrats are more or less assured of victory there, so the significant easing of gas prices in the state to just over $2 last week from $2.24 at the end of June is unlikely to do much to lift Bush's re-election prospects.

Meanwhile in Ohio, which both sides are treating as a must-win state, gas prices last week were at $1.87½, up just over 27 cents since last year and 7 cents since the beginning of the month.

The driver of a Ford Expedition in Cleveland, for example, can expect to be spending an extra $250-$300 a year, shouldering annual gasoline costs nearing $2,000. (The calculations are based on 14-18 miles a gallon gas consumption and average annual mileage of just over 15,000 miles.)

In Florida, the state that delivered Bush the White House in 2000 and where polls have begun to tilt against him, prices have eased in the past two weeks. But across the Midwest, gas prices remain high.

Pump politics may be poised to swing back in Bush's favor. By comparison with other historic surges in the oil price, the impact on the wider economy has been muted. Republicans are hoping prices will continue to drop between now and Nov. 2.

So far, the pump has played decisively to John Kerry's advantage. On the campaign trail across the U.S. this month, the Democratic presidential candidate has repeatedly used some variation of what has become the most reliable applause line of his stump speech: "I want an America that relies on its own ingenuity and innovation not the Saudi royal family."

The Bush White House has been frustrated, embarrassed and increasingly challenged by high prices.

Greg Mankiw, chairman of the president's Council of Economic Advisers, this month blamed the squeeze on consumer spending and concerns about a decelerating economy on the price of oil. Petrol prices have also focused public attention on Bush's relationship with the Saudi leadership. The allegation in Bob Woodward's book, Plan of Attack, that Prince Bandar, the Saudi ambassador, promised the White House to help ease oil prices in time for the election is a double embarrassment: first, outrage and denials from the administration that a political deal had been struck with the Saudis; then disappointment that no such deal has materialized.

The White House has come under pressure from Republicans among others to halt purchases to the Strategic Petroleum Reserve.

Bush says the SPR must be maintained, but economic advisers to the campaign have been arguing that the administration's commitment to buying oil has encouraged speculators.

© The Financial Times Ltd 2013. "FT" and "Financial Times" are trademarks of the Financial Times.

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