Cheap Oil saved Reagan and enshrined Free Market Fundamentalism?

[Odin2005]

A poster on another message board posted that had it not been for the glut of new oil discoveries in the early 80s the stagflation would have continued and the Dems would have crushed Reagan in '84 even if we would have run Mickey Mouse. According to the poster the whole ascendancy of "Supply-Side" BS was an historical fluke cause by the return of cheap oil in the early 80s!

[Ishoutandscream2]

1. Gas prices tumbled below a dollar a gallon around 83

I was in college at the time and was actually quite relieved. That is an interesting statement from that poster. I never looked at the 84 election in that way, but sounds like he has a good point.

[Selatius]

2. Gas prices were dropping throughout most of the Reagan presidency.

Stagflation is caused by energy price spikes. In most economies, when energy prices go too high, it acts like a tax on economic activity, slowing it down. Consumers cut off spending to divert to fuel costs, and producers in turn start laying off workers to cut back production. The difference is that rather than try to eat the increased fuel costs, producers try to pass it onto consumers. It is here that you can actually see prices rise at the same time that unemployment rises. Typically, in a downturn prices drop with unemployment rising because producers are trying to shed excess inventory left over from the boom.