WASHINGTON – If fuel prices keep rising or even stay at their present high levels through Election Day, they could serve as a potent reminder to voters that the U.S. economy is not in such great shape.
And that could pose problems for President Bush just as polls show him narrowing the gap with rival John Kerry on his weakest issue, handling the economy.
Political analysts suggest any sustained oil price shock could undercut those gains and work against Bush's fragile lead in polls over the Massachusetts senator. In the extreme, it could trigger a recession.
Crude oil topped the psychological milestone of $50 per barrel on Tuesday. Instability in Iraq, political unrest in Nigeria and damage to U.S. production from hurricanes were all blamed.
And while some analysts said the price was not sustainable and should soon fall, others suggested the opposite.
"There have been an awful lot of such events," said David Wyss, chief economist at Standard and Poor's (search) in New York. "And when you have a new special factor every week, you have to wonder how special the factors are.
"The basic fact is that oil supplies are getting tight and there's not room for things to go wrong," Wyss said. "And the higher prices are becoming a significant drag on the economy."
Bush and Kerry remained out of sight as they rehearsed for Thursday's first presidential debate. But their surrogates were busy spinning the oil price surge.
Treasury Secretary John Snow (search) called it a "short-term phenomenon. ... This $50 price is the result of an anomalous set of circumstances.
"The uncertainties are feeding speculation and that speculation is driving prices higher than something that is supportable," Snow said, telling an audience of business leaders in Reno, Nev., that oil prices will recede.
The administration last week agreed to lend 1.7 million barrels of oil from the government's Strategic Petroleum Reserve to two refiners running short because of Hurricane Ivan, and broadly hinted it might be willing to make more crude available from the stockpile.
Such an announcement — with its political overtones less than six weeks before a presidential election — normally could be expected to help ease oil prices. But they rose instead.
While the hurricane season should be over by Election Day, production in the Gulf of Mexico restored and tankers able to deliver their cargo, "That's not going to have any immediate positive impact on prices," said Robert Ebel, an energy expert at the Center for Strategic and International Studies (search) in Washington.
Ebel said foreign oil will have to be used to replace drawn-down inventories at U.S. oil companies "for some time." He also said "continued sabotage and looting in Iraq is going to keep oil production and exports down."
The real crunch is likely to come at the beginning of the winter heating season, he noted.
But that's after Election Day.
Bush's approval rating on handling the economy had gone as low as 43 percent in May in an Associated Press-Ipsos poll. It's now at 53 percent.
The Bush and Kerry camps are blaming each other for the high prices.
"You know they said that the price of a barrel of oil would be about $27. It's now over $50," Democratic vice presidential nominee John Edwards told a town hall meeting in Pittsburgh.
"This is not a complicated thing," Edwards said, noting "long, deep ties" of Bush and Vice President Dick Cheney "with big oil companies and the Saudi royal family."
"What are the odds that George Bush and Dick Cheney are ever going to move America toward energy independence? It will never happen. It will not happen while they are in office," Edwards said.
White House spokesman Scott McClellan (search), briefing reporters in Crawford, Texas, mostly blamed "Senate Democrats, including Senators Kerry and Edwards."
They "have continued to block efforts to pass a comprehensive energy plan ... so that we can reduce our dependence on foreign sources of energy," McClellan said.
The energy legislation McClellan referred to was opposed not just by Democrats but by some leading Republicans as well, including Sens. John McCain of Arizona, Trent Lott of Mississippi and Judd Gregg of New Hampshire, who is helping Bush prep for his debate with Kerry.
"Every time gas prices or oil prices hit new highs, they pull out this energy bill," said Kerry campaign spokesman Phil Singer. "It's bad legislation that provides huge giveaways to oil companies and special interests."
Meanwhile, McClellan said the administration is keeping "a close eye" on rising oil prices "that could create more of a headwind as the economy moves forward." And it's certain they're keeping close track over at the Bush-Cheney campaign headquarters as well.