Low Gas Prices May Not Benefit Obama

NEW YORK (TheStreet) -- There's a funny thing about the rhetorical attacks surrounding Barack Obama and the economy in 2012: Much of the criticism is laced with contradictions.

If Greece exits the euro, there's an argument to be made that the resulting contagion could spread through other weak financial markets in Europe, like Spain and Italy, and then domino through the continent until it eventually jumped the pond to the United States.

On the other hand, gas prices would likely drop, typically a benefit for consumer spending here in the good, old U.S.A.

Republicans ramped up attacks against Obama in February -- a charge led by former GOP hopeful Newt Gingrich -- and blamed him for spiking gas prices, but retail gas prices have edged slowly downwards in tandem with lowered costs for Brent crude.

"With everything that's happening in Europe at the moment, right or wrong, that's lowering our gasoline price as well, because concerns there are causing a slight out of Brent crude falls," says Matt Smith, a commodity analyst at Summit Energy Services. "So Greece defaulting could lower our gasoline prices, weirdly enough. It's a small world."

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At $3.71 a gallon for the national average of regular gasoline, Americans zooming across major interstates over the course of this Memorial holiday weekend will discover it's costing them about 14 cents less than it did the same time a year ago, and about 23 cents less than the 2012 peak.

"If we're looking at this on a fundamental basis, supplies are relatively tight ... [but] the counter weight to that of course is that demand is very poor and continues to be," says Addison Armstrong, senior director of market research at Tradition Energy. "What is going to be very much the driver of gas prices is the price of Brent crude oil."

The good news for consumers is that unless diplomatic talks with Iran and the West end in failure, Brent and gasoline are likely to continue a gradual push downwards -- Smith argues it could dip by as much as 50 cents through the end of summer.

International talks with Iran still have a few more rounds before the United States and Israel must make a military decision whether to strike Iranian nuclear operations -- an extreme action that leaders believe could result in an Iranian blockade of the Strait of Hormuz, where some 20% of the world's oil passes through.

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