Oil Fell 8.3% After the Midterms. Was It Rigged?

The day after the midterm election, crude oil fell 8.3% as traders reacted to political statements about ending the war with Iran. The price drop occurred after voting ended rather than before, reflecting changing market expectations rather than proven election rigging.

The Post-Election Drop

On Wednesday, November 4, U.S. crude fell $7.97 to settle at $88.12 a barrel, which was an 8.3% decline. Brent crude dropped 8.7% to $94.62, marking its lowest price point since August 31. Just five days earlier, Brent had touched $118.

Traders sold oil contracts on expectations that a Democratic sweep would lead to ending the war with Iran and reopening the Strait of Hormuz. Politicians addressed this outcome directly, with Vice President Vance blaming the war for the election loss and Senator Chuck Schumer promising to end it. Oil had already fallen more than 14% that week, even though a weekly government report showed crude stockpiles dropped by 865,000 barrels.

Timing and Voter Impact

If an actor intended to rig an election using fuel markets, prices would need to drop before you cast your vote. Instead, prices fell only after the polls closed, following weeks of expensive fuel. On the morning of November 4, gasoline averaged $4.12 a gallon, which was nearly 40% higher than before the war started.

Voter polling by the AP surveyed about 80,000 voters and revealed that the economy was the primary issue for about four in ten people. About eight in ten respondents reported that inflation caused moderate or severe hardship, and about three in four rated the economy as poor or not so good. High pre-election fuel costs historically harm the party in power rather than help it.

Crude oil accounts for about half of what you spend on a gallon of regular gasoline. According to the Energy Information Administration, every lasting $1 change in crude alters retail gasoline by roughly 2.4 cents a gallon. You generally see half of that shift within two weeks and about 80% within four weeks, making the post-election drop worth an estimated 19 cents a gallon.

The Gap Between Oil and Gasoline

In July 2008, crude reached $147 a barrel while pump prices peaked at $4.11. Because a barrel holds 42 gallons, the price you paid at the pump was only about 61 cents higher than the crude inside it.

By contrast, when crude stood at $88, pump prices sat at $4.12, creating a gap of about $2. While it takes two to four weeks for crude price drops to reach you, refining constraints have kept this margin wide. In 2020 alone, U.S. refining capacity shrank from 19 to 18.1 million barrels a day.

Refinery Policies and Regional Costs

Local regulatory rules have further restricted fuel supply. California has closed or converted 4 refineries since 2020, and its drivers pay a 63 cents state excise tax alongside roughly 42 cents for carbon programs.

When Valero prepared to shut its Benicia refinery after facing around $82 million in fines, it cited strict regional regulations. Because Nevada receives 88% of its gasoline from California, regulatory shifts in one state raise fuel costs for drivers in neighboring markets as well.

Past Manipulation and How It Is Proven

Major energy companies reported large third-quarter profits, including $15.4 billion for Exxon, $9.9 billion for Chevron, and $56.3 billion across five top Western oil producers. However, high earnings do not constitute proof of an illegal conspiracy.

Regulators prove illegal manipulation using trading records and internal messages rather than price drops alone. In 2022, Glencore paid about $1.2 billion for fuel oil benchmark manipulation, BP paid about $303 million in 2007 for cornering a propane market, and Optiver paid $14 million in 2012 for futures manipulation.

Economists have noted since 1997 that retail prices rise quickly like rockets and fall slowly like feathers. If you suspect local price gouging, you can file a complaint with your state attorney general or report it to the Federal Trade Commission.

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