Gas Prices: You Shouldn't Care

Daniel Drezner asks why a spike in gas prices is considered a political crisis. He thinks it is because:

1. Being tied to the Middle East, coverage can always include that political twist
2. It's one of the few things actually controlled by a real cartel
3. Gasoline is the one commodity both genders have close to perfect information and may be mobilized to seek a political solution.

I think the real answer is pretty simple: politicians make it a political crisis because they think it will make them more popular. What interests me is the warped way by which gas prices become such a major part of the national discussion in general.

I think all of Dan's reasons are valid. But I think the major issue is that there is not much short term elasticity for gas. As prices go up, we pretty much have to continue to buy it and people hate that. Mass transit isn't feasible in most places outside of cities where the jobs are densely gathered. Even when it is feasible, in many cases you are basically agreeing to stand in a crowded area amongst questionable companions for like 12 cents an hour. Car pooling is lame: You add like an hour to your trip by having coordinate and meet up with someone you probably wouldn't want to spend time alone with otherwise and it saves like $1.23. Definitely not worth it. And transaction costs and other factors make implausible to sell your SUV and buy a Toyota Tercel. Plus, then you would have to drive in a Tercel.

So, unless you or the market thinks your time is pretty worthless, you probably just have to eat the extra cost. People don't like that because price increases for necessities smell unfair. We don't mind paying $10 a gallon for bottled water and coffee because we control our consumption of those items. But we're over a barrel on gas prices and people don't like that.

To me, this is when things get interesting. Because there is nothing we can do about it, and because it is something which effects pretty much everyone, gas prices become a shared experience around which there is mutual agreement and which can fill in conversation gaps. Just like male co-workers may never speak unless discussing sports, or everyone comments on the weather, rising gas prices is a safe subject by which to break the ice with others, or fill in gaps in conversations with semi-acquaintances, friends and family. Next to water coolers the country over "Looks like gas is going to crack $3" is added to the usual repertoire of "Looks like rain." and "Must be April, both Wood and Pryor are on the DL."

Of course, amongst people that actually think about it, no one REALLY cares. We don't really care about our cubicle-mate's 10 day forecast or uninformed opinion on Drew Brees vs. Philip Rivers. And we definitely don't care that the Mobil that sells syringes and razor blades over on MLK Blvd. has 3 cent a gallon cheaper gas. But we still talk about it. A lot. It's a neutral, comfortable area of agreement.

For this reason, it also becomes something the local news can pump. This is important because research has shown the local news should only lead with a story related to sex criminals five times a week or it risks losing its novelty. So they are constantly looking for a topic to break things up. Sending some guy to stand in front of a gas station fits this perfectly. It's a great graphic and with the proper tease (Study says gas could be $40 a gallon! News, at 11!) people will keep the TV on after ER. Through a non-virtuous cycle, seeing it on TV makes it a bigger issue, leading to more conversations, more stories, etc. etc.

So you have something which affects everyone, everyone talks about it, and it's on the news all the time. So naturally, the path of destruction between a congressman's office and the nearest camera is breathtaking.

Of course, it shouldn't be. Higher gas prices definitely hurt those with lower income. And I'm sure Wal-Mart sold fewer Peeps this Easter because this reduction in disposable income affected some people's spending. But if your driving 12,000 miles a year at 30 mpg and gas goes from $2 to $3/gallon, we're talking about a dollar a day. Even in an SUV getting 20 mpg we're not even talking about $2 a day. I'd say 85% of us can swing that with little problem. Skip a soda at lunch and you're back even.

The amount we have to hear about gas prices is stupidly disproportionate to its actual importance and our ability to do much about it by complaining or sending stupid forwards with a plan to not buy gas on Tuesday and to boycott Exxon until they bring the price down to $1.50/gallon. If politicians are serious about helping us keep our hard earned cash, then they should look at how Scary Movie 4 managed to gross $40 million in its first week.