"When I was speaker for four years, the average price was $1.13. When Obama was sworn in, the average price was $1.89. So trying to get to $2.00 to $2.50 is closer to the historic norm. Think of it as a pre-Obama norm." Former Speaker Newt Gingrich, Feb. 23
"We went into a recession in 2008 because of gasoline prices. The bubble burst in housing because people couldn't pay their mortgages because of $4-a-gallon gasoline." Former Sen. Rick Santorum, Feb. 27
It all relates to the old economic principle of supply and demand. Demand plunged because of the worldwide economic woes, and so prices fell. But, as the Energy Informational Administration's historical table of monthly prices shows, the low was reached in December 2008 -- $1.69 a gallon -- before Obama even became president. Then the price of gas started going up as the economy began to improve. (The EIA charts are at tinyurl.com/76lu9j6)
Far from being a "pre-Obama norm," the price was artificially low. Only six months earlier, in June 2008, the average price was $4.05 a gallon. In fact, the last time gasoline had been as low as $1.89 had been in 2004.
As for the price of gasoline during Gingrich's term of speaker, his figure seems in the ballpark. But he is also off base when he says that $2.00 to $2.50 is the "historic norm." Adjusted for inflation, gasoline has generally retailed above $2.50 since 1919, except for the period between 1986 to 2005, when it hovered just below $2.
Meanwhile, Santorum seemed to go in an opposite direction, reminding listeners that gasoline prices were high before the recession -- and then blaming the recession on that fact.
One would think that Santorum's theory would have been highlighted in the many examinations of the roots of the economic crisis. But it appears nowhere. The Financial Crisis Inquiry Commission, the congressionally mandated panel that examined the financial crisis, in its 629-page report barely touches on the rise of oil prices. It notes that higher oil prices were one of the factors (along with declining home prices and turmoil in the financial markets) that affected consumer spending. (The report is at tinyurl.com/7b3u5aw)
Meanwhile, the Congressional Research Service in 2010 compiled a guide listing 26 possible causes. Santorum's theory does not make the list.
Still, some experts have argued that the rise in oil prices in 2008 made the recession much more painful. Nevertheless, it is misleading to claim that any single factor led to the Great Recession. As the commission's report makes clear, it was a perfect storm of many causes happening all at once.