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." > > Bull or Bear? Vote in Our Poll 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.
But even then, the situation may not be as terrible as it sounds. "Another reason perhaps why
with Friday's Iran talks that we didn't see as much of a oil market reaction ... is because we've replaced Iranian oil already," says Phil Flynn, an analyst at PFGBest. Flynn explains that OPEC nations have been producing more oil since 2008, U.S. supplies are at a 22-year high, Europe has built up supplies and strategic reserves and the United Arab Emirates has a pipeline that can avoid the Straits of Hormuz. Simply put, a lot of players have saved up in case of an Iran crisis. "If we did see Iran shut the Straits of Hormuz, it would be like the first Persian Gulf War: we'd rally on the rumor, and then we'd crash on the fact," Flynn says. Republicans have largely used the gas-prices argument against Obama so as to attack his energy policy -- specifically that he has prevented development of American oil resources and relies too heavily on foreign reserves. Obama said in his State of the Union speech that U.S. oil production is at its highest level in eight years and that the country has relied on the least amount of foreign oil in the last 16 years, but opponents point to Obama's rejection of the Keystone oil pipeline measure that would have created jobs and had sizable Democratic backing . Obama said in March he plans to order approval of a southern part of the Keystone pipeline -- a move that may signal his commitment to give the thumbs up to the whole operation after the elections, should he be re-elected, of course Opponents of the president also fault Obama for higher gasoline prices by pointing to the rise in cost since he took office; per gallon, it's 101.6% higher now. This argument though ignores the economic situation that unfolded at the end of 2008 and carried through 2009: A collapse in the global financial system that drove down the price of crude to $1.84 a gallon in Obama's first week in office from all-time highs at $4.11 in July 2008 near the end of George W. Bush's second term. "It mirrors what happened in the crude market just because crude prices went from $147 to a low of $32 in December of 2008," says Smith. "Just this onset of the recessionary conditions: the markets crashed, everyone panicked and everything deteriorated, and the bottom fell out of the market. The same thing just happened to gasoline prices." Sure we could be poised for much lower gas prices, but for that to come from a worst-case-scenario of contagion from Greece wouldn't be good news anywhere else but the pump. By that logic, low gas prices could spell disaster for the president in November. -- Written by Joe Deaux in New York. >Contact by Email. Follow @JoeDeaux