Gas prices dip as November election nears; is there a connection?

by John Paul (jpaul@wsbt.com)

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Some consumers are wondering if there is any correlation between falling gas prices and the upcoming election. (WSBT photo)

By WSBT News1

Story Created: Oct 22, 2008 at 4:59 PM EST

Story Updated: Oct 29, 2008 at 11:16 AM EST

SOUTH BEND — Right now, gas prices are only 4 cents more a gallon than this time last year. Tough to believe, especially after record prices in July hit $4.06 a gallon in Indiana.

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For much of 2008, filling up has been a real pain at the pump for Danielle Denny. She spends more than $50 to fill up her car.

Since Memorial Day, gas continued climbing to record levels. That forced Denny to take a few shortcuts.

"I'm spending that much with regular," Denny said. "I'm supposed to use premium."

Indiana's average price for unleaded fuel is down to its lowest levels since March. Statewide, the average rings in at $2.77 per gallon, according to AAA.

"It makes sense with what the market is doing," one person told WSBT News.

As Denny's total climbs at the pump, the downward spike is adding up to some smiling faces.

One woman told WSBT News, "I was in southern Indiana and when I returned home to find the prices lower, I was pleased."

With elections just a few weeks away, is the price decrease a political move?

Economics professors with Notre Dame and Saint Mary's College say no.

"I think the election has very little to do with it," said Jim McElroy, a professor at St. Mary's College.

"People drive less and the kids are back to school so there's no more summer vacations," said Thomas Gresik, an economics professor at Notre Dame. "Refineries have worked through the supply reductions that occur because of the switch from winter blend to summer blend."

Gas on average in Indiana was $2 per gallon for unleaded fuel in the weeks leading to the November 2, 2004 presidential election.

The average remained steady throughout November.

During elections in 2006, the state average was $2.14 a gallon for unleaded fuel. The prices climbed about six cents in the weeks leading to Election Day.

"The reason prices are falling now has to deal with America possibly sinking into a recession," said McElroy.

Paul Hesse, with the Energy Information Administration, said the high prices for gas and the weakening world economy helped reduce demand and prices for crude oil and gas.

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