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Does an Election Year Impact Energy Prices?

Nearly half of all Americans believe that Presidential elections have more influence on energy and fuel prices than market forces. For this portion of the American population, gas and oil prices are more about politics than economics. However, energy experts and economists have a different opinion.  

Denton Cinquegrana, Chief Oil Analyst of Oil Price Information Services (OPIS), understands how the public so readily believes this myth. It’s not uncommon for politicians to take credit for market conditions, whether or not they’ve had any impact on it. 

If elections aren’t the driving force behind election year oil and gas pricing trends, then what is? Examining election year energy pricing trends unveils the surprising factors that truly drive the gas and oil market. 

A quote from Denton Cinquegrana on election year energy prices

Why Do Gas Prices Fall Before Elections?

Presidents actually have little-to-no power to directly affect or control energy prices. While political policy may shape the energy market over time, it cannot be influenced by a President’s will. In fact, gasoline prices are lower before elections due to regular seasonal fluctuations that occur every year.  

Suppliers typically make the switch from expensive summer-grade gasoline to less expensive winter-grade gasoline after Labor Day weekend. Less expensive fuel paired with lower consumer demand in autumn is the classic combination that results in lower rates. 

The difference between Winter-Grade & Summer-Grade Gasoline

Summer-grade gasoline ranges from $0.10-0.30 more expensive than winter-grade gasoline, depending on state regulations. Summer-grade gasoline is more expensive because it must meet stricter safety and air quality standards due to higher seasonal temperatures. Winter-grade gasoline is less expensive because the colder weather has less restrictive safety standards to adhere to.  

What Happens to Oil Prices During Election Years?

A 2016 report conducted by S&P Global Commodity Insights examined oil prices 90 days after presidential elections from 1992-2012. Their data showed a common trend when a new president is elected versus when a president is re-elected. If a new candidate wins the election, there is typically a dip in oil prices right around election day. If the results of the election are a second term, their data shows more consistent pricing throughout the fall.

Their study also found that oil prices typically rise around inauguration day in January. Although, it’s important to note that historically January is the beginning of peak winter energy demands. Nearly every year sees a seasonal increase in oil prices around this time due to increased demand.

Graphic of U.S. Election Map

U.S. oil production is at an all-time high 

The largest contributor to unexpected oil price fluctuations is supply and demand dynamics. Fortunately, the U.S. supply is at an all-time high, outproducing the other top two producers, Russia and Saudi Arabia. In late 2023, U.S. oil producers were pumping a record-breaking 12.9 million barrels every day. While oil demand is expected to increase throughout this year, it will be easily met with the current rate of production. Our supply surplus is likely to contribute to more stable pricing throughout the upcoming election.  

Source: www.eia.gov

When are Energy Prices at their Lowest Rates?

Consumers will find that spring and early fall are the best times to secure the lowest energy prices on the market. The milder climate leads to a decline in demand, resulting in low energy rates. Spring and fall are the ideal times to lock in a low, fixed rate energy plan, providing long-term energy savings. 

Myth Debunked: Market Dynamics, Not Elections, Drive Energy Prices

For the most part, energy prices are driven by Mother Nature, geopolitics, and global supply and demand dynamics. While political policy helps shape our energy and fuel markets, presidents don’t have the ability to change the market at-will. The current state of production puts the U.S. in a position that will likely yield more stable rates throughout the election.  

Spring and fall are typically the most cost-effective times to secure a competitive energy plan. However, the industry expertise of commercial energy brokers, like Integrity Energy, can help you unlock potential savings! Take a proactive step towards more management energy expenses by requesting a free quote from our energy experts. We’re able to leverage our partnership with 30+ top-rated energy suppliers to provide customized energy solutions at low, competitive rates. Contact us to start saving energy today!