Are gas prices manipulated to go down prior to a Presidential election?  My research led me to look at the national level because the data for states is difficult to ascertain, and probably irrelevant.  According to the EIA, in particular their Oil Market Basics publication, the largest variance in gas prices would occur at the regional level, largely due to supply issues.  Looking at the breakdown of what makes up the price of gas, we get the following:

Distribution and marketing are mostly the profit the local station makes.  Taxes, then, are the only portion of cost over which a state has control.  Taxes are relatively steady and typically don’t change month-to-month.  So what made sense was to look at the national level, to see if there were trends there (select the image to see it bigger):

Gas Prices and Presidential Elections, 1992 - 2007

No smoking gun here.  If anything, there seems to be a trend in recent non-Presidential election years for gas to drop prior to November (2001, 2003, 2005, and 2006).  But in contrast, gas prices in the Presidential election years have remained relatively flat or, in the case of 2004, have increased prior to Election Day.  If there were some manipulation going on, I would have expected to see a stark contrast in the trends of election and non-election years.

I have to admit, I wasn’t sure how this one would turn out; but it appears that this myth is busted.

Source: Energy Information Administration