The psychology of increasing gas prices

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myelin

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I've noticed quite a few changes in people's behavior lately with respect to surging gas prices. I've read stories of people drilling into other people's gas tanks to steal gas as well as family vacations being put on hold. With my own behavior, I've noticed that I'm staying home much more and have been walking to campus rather than driving.

What kind of things do you see happening as a result of increasing gas prices? Also, what are some of the psychological effects that we may encounter?
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Well, the thing I notice most is people's concern over gas prices seems to vastly overpower logic. Folks will drive 5 miles to save a penny on gas despite the fact that they are essentially burning more gas money than they're saving.

NY is concerned that the fact that they have some of the highest prices in the nation right now will affect tourism. Honestly, if you're spending $1000 flying your family of 4 out there, another $1000 on a hotel for a week, will the extra $20 you may spend on gas in NY relative to other states really break the bank?
My new favorite is the car commercials around here that now "guarantee" gas at $2.99 for the first year, or whatever it is. The reality is that unless someone is driving a simply ludicrous amount, they probably are getting a WORSE deal than a normal everyday sale. Not to mention if gas prices actually drop back down, that company just made some serious bank. Yet I'm sure they have people lining up at the door.

Really, what it all boils down to is that as panic level increases, the value of the "gas dollar" increases relative to the "everything else dollar".
 
I find myself worried about the climbing gas and food prices as I'm cutting back on everything I possibly can. My family quit eating out several weeks ago and I started planning two weekly meatless meals to save cash. I would walk or ride the bus but work/school is to far and there is no public transportation in my area.
But I believe the problem is not only the demand but the speculating on Wall street is driving the price up rather the letting the market set the price. I personally think the gas prices is a bubble like the housing market and it is my fondest hope the bubble will burst soon and prices will come back down. I think that if the US Dollar gains strength this could happen.
I also believe the Presidents tax cut and rebate checks that went out, created a panic in the public and rather than help, I think it made the problem worse.
 
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Some speculators put gas at over $300/barrel before too long due to increases in demand from China and India. Regardless of where the price goes, the U.S. is finally being put on the same level as Europe. And that's not even really true, since gas there is closer to $8/gallon. Our bubble of consumption has burst, leading to changes in behavior that I personally hope are for the better. Even if the savings are negligible and people aren't really "getting it" in terms of economic theory, etc. to see people driving less, using public transportation/walking/biking/other alternative means more is a shift our society needs. Since the motivation for change isn't intrinsic, being forced by financial pressures is the swift kick in the butt we need. Then again, that McDonalds dollar menu becomes popular in hard economic times. Just hold the tomatoes :D
 
I admittedly know little about economics, but I firmly belive that gas prices will not come down significantly ever again. Not more than 50 cents from the average we are at now (which would just put us back to where we were 3 months ago actually). They (oil companies/oil producers) see that we still to buy it at this price, so what is their incentive to bring it back down to $2 a gallon (which was just 3 years ago)?

Just for some perspective, I specifically remember the gas station next to my apartment was at $2.89 in august (10 months ago). My parents were vistiing from the Midwest and were shocked at the high price. The same gas station is now at $4.44/gallon.
 
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I'm always kind of confused about why the US worries about gas prices so much. Here in Canada we pay about 125%-150% of what you guys pay and nobody really worries about the world ending.

It'll be okay, I promise. :laugh:
 
Quite simply, if supply goes up, price goes down; supply goes down, price goes up.

But, how do we, the consumer, actually know what the supply is from the US? We don't. I read an article the other day that said that OPEC was being sued because they weren't basing prices on the economic principal of supply and demand. Instead, they are cashing in on fear and panic. What is interesting is that it seems like many Americans are finding other alternatives to using oil, such as riding bikes, walking, and using alternate forms of energy. It's good to see that people are considering alternate forms of transportation.

One would think that as the demand decreases, the supply should increase, leaving a surplus that would lead to a decrease in the price of oil. It doesn't seem to be happening at this point in time. Maybe the oil companies are calling our bluff? Maybe the price reflects true supply and demand? Who really knows?

Regardless, I don't think that the increase in oil prices could have come at a better time. In light of global warming, Americans are starting to think more "green" by being more aware of their footprint on the environment. There seems to be more interest in recycling, conserving natural resources, etc. I think it's sad though that people are cashing in on the whole "living green" way of life. I was flipping the pages through a trendy women's magazine tonight and came across an article about how you can "be green in style" with purses that are made of recyclable materials but don't look all icky like a lot of recycled goods. :laugh:
 
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RayneeDeigh said:
I'm always kind of confused about why the US worries about gas prices so much. Here in Canada we pay about 125%-150% of what you guys pay and nobody really worries about the world ending.

It'll be okay, I promise. :laugh:
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I agree with you, RayneeDeigh. It seems that many Americans get very scared, very easily. Our markets can swing one way or the other based on fear alone. About a month ago I recall reading about a shortage of rice and other food staples and how many Americans were going out stocking up on them out of fear that we were running low on food. How about Y2K? I'm sure many millionaires were made during that time based on fear alone.
 
I do agree that its nice to see America "going greener". However, I think a big issue is that since no one gave a crap beforehand, the country is not currently set up for it.

For example, come visit me in Florida. When I was moving, I was excited about being able to bike to campus since I'm just a few miles away. I haven't even bought a bike yet because 1) There are very few sidewalks in between here and campus, and 2) No one has been near the state of Florida should ever be allowed to operate any kind of motor-propelled vehicle again. Ever. For any reason.
Thus I can't bike to campus and back. Fix any one of those factors (#1 is probably easier) and I could, but I doubt they will anytime soon.

I think its great if people are being forced to attend to the environment. What scares me is that the government is putting the onus on the people to "use less gas" without providing the things we need to make that possible.
 
Unfortunately it isn't supply and demand because there is an artificial market and some other external control factors that have no interest in balancing supply and demand.

Ron Paul definitely had a better plan to deal with this (and many other) issues, but he lost out to the richer and more well connected people who perpetuate this artificial market, and the candidates they support.
 
50% of registered vehicles in the US are SUVs. Quite frankly, if people are that worried about gas prices, they should not drive gas-guzzling cars. Despite all the news reports about penny-pinching, I still see huge and gas-guzzling cars all over the freeway.

The average MPG of American cars has DECREASED in the past twenty years, because cars keep getting bigger (including the new Prius coming out). The Ford Model T in 1908 got 25mpg. 100 years later, we're not doing much better. Auto makers don't WANT to improve mileage, really... There's no incentive, and probably a disincentive from their friends at the oil companies.

The US needs to stop stalling on legislation, and make a 35-40mpg minumum on all new cars (and not just a company-wide average). European auto companies, for example, must average 40 MPG and China requires a 35 MPG standard.

Psychologically, there's hypocrisy going on here at an institutional and individual level: most lawmakers and citizens are happy to complain about gas prices, but not significantly change their lifestyles.
 
Cosmo75 said:
the U.S. is finally being put on the same level as Europe. And that's not even really true, since gas there is closer to $8/gallon.
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I was laughing when I read this because it's true. I am seriously freaking out right now because I can barely afford gas right now and I have to drive since the nearest anything is about 7 miles (with nice little hills and one major road without any sidewalk) and my school is about 20 miles away. Funny thing is when I left Europe almost 5 years ago to come to the United States THIS (~ $4 per gallon) is what I paid back there and I could not believe that Americans only (!!!) pay about one third of that. They probably think we pay little for our gas. Thing is that the USA has horrible public transportation as soon as you leave the major ( and I mean major) cities. In my homecountry even if you live in the woods there is still public transportation nearby and even if it wasn't people would just take a car there and then take the bus or train. And altogether I find that they are much more open to use public transportation or just walk or ride a bike than any American ( unless you live in a major metropolitan area). This is just a wild guess but I think this has something to do with the "American" mindset on freedom and independence and hence the "need" for at least one car per person in each household. I am also still surprise that American drive these gigantic, gas eating monsters that barely give them any mileage. Thank god I have started to see some smaler cars on the road. I think if Americans came to Europe they would probably feel claustrophobic because at least 50% of all cars there VW Golf, Ford Focus or the alike and major reason being is saving gas.


Just my $ 0.2
 
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I believe that the mentality behind rising gas prices more has to deal with the fear of an imprending apocalypse of sorts. Everyone knows that gas prices will rise along with prices of everything although sometimes more steeply as in the spring / summer months. With the rising gas prices, wars and other concerns such as global warming comes a generalized irrational fear. Perhaps people are actually worried about the price of gas, but does it really make that big of difference? I pay few dollars more at the pump yes but I expect to. When things seems to be out of people's control, people get worried.
 
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positivepsych said:
50% of registered vehicles in the US are SUVs. Quite frankly, if people are that worried about gas prices, they should not drive gas-guzzling cars. Despite all the news reports about penny-pinching, I still see huge and gas-guzzling cars all over the freeway.

The average MPG of American cars has DECREASED in the past twenty years, because cars keep getting bigger (including the new Prius coming out). The Ford Model T in 1908 got 25mpg. 100 years later, we're not doing much better. Auto makers don't WANT to improve mileage, really... There's no incentive, and probably a disincentive from their friends at the oil companies.

The US needs to stop stalling on legislation, and make a 35-40mpg minumum on all new cars (and not just a company-wide average). European auto companies, for example, must average 40 MPG and China requires a 35 MPG standard.

Psychologically, there's hypocrisy going on here at an institutional and individual level: most lawmakers and citizens are happy to complain about gas prices, but not significantly change their lifestyles.
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I agree. You know, I think it's funny that I moved from a city that's covered in snow 8 months of the year and filled with Echos, Yarises, and Smart cars (although those are kind of a rip), to a city where it never freezes that is filled with SUVs and (gasp) those *****ic Hummers. I'm also not phased by gas prices, since I'm used to the higher Canadian prices.

The mpg thing weirds me out too. I hear people going on and on about Prius' mpg. An eight-year-old Insight beats the Prius into the ground. Older well-built gas engine cars can match it.

My scooter gets about 70-80 mpg :) It would be better but I generate a lot of drag. :) I'm getting a Yaris this year, only because it's necessary for things like getting groceries or leaving the town.
 
the panic/fear of the gas (according to my availibility hueristic :)) seems to outweigh what is really going on (as said earlier). there are always trade-offs that can be made to have the gas, but people and nickle and diming where it just seems to be ridiculous. a family of four could skip out on a dinner at outback and other place for a week, and save enough to have a tank (in most cases).

i guess what I am trying to say is that logic is being over taken by fear. the fear part is rather crazy because what the fear is based on is missing out on a few luxaries (going out more, buying more expensive cars, traveling more) and not the end of the world like people are saying. this doesnt apply to everyone, but it does seem to be getting out of hand ;)
 
Some people I know are convinced that the government and oil companies are tricking them and gouging prices somehow, no matter how many times I explain how the world oil market works.
 
I have never before in my entire life worried about money. My daddy told me "there is no debtor's prison" and I seem to have used that as a mantra.

However, since gas started going up, I have re-evaluated everything in my life right down to my career. For the last 3 years, I commuted 150 miles a day to work in rural NC. I enjoy rural health but I like to live in civilization. Even though I drive a 34mpg car, I ignored an interview last week because I just don't think my "wants" are worth $1000/month (after adding on in-town driving, regular travel, etc) in gas.

I am considering only accepting positions where I am fixated in one location and those are very hard to come by for even 10-yr experienced clinicians.

I'm afraid of money for the first time in my life. Make it go away, please.
 
cara susanna said:
Some people I know are convinced that the government and oil companies are tricking them and gouging prices somehow, no matter how many times I explain how the world oil market works.
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Well, I dunno about that. Like T4C said, it's a pretty artificial market. And I don't think it's conspiracy paranoia to think that oil companies have a goal of maximizing profit; that's just a fact. :)
 
I began my war on the oil companies. I purchased a new bike (A cool one I might add. I probably spent too much and it will take me a while to actually recoup the money from gas savings but at least I did it. I even started an SDN Thread on the All Community area to help decide what kind of bike I should buy - bikes have changed a lot recently in terms of the styles, designs, and even the mechanics). So last week, I began riding to work as well as to my gym. I am even tempted to pick some girls up for dates on my bike - the handles bars provide a good seat! :laugh: Bicycle stores in my area are doing great business. A recent news story even reported a shortage of bikes. One dealer told me (of course he is the sales man and stands to gain) that the prices of bikes are also going up! After I started riding, a coworker decided to ride too. No we are trying to convince others to join.

Unfortuantely, I have to drive on an upcoming trip since I have to transport some things. Flying would cost even more taking into account the add ons (transportation too and from the airport, fees for extra bags or packages, and any shipping I might have to do of packages). Maybe, I should drive at night - less traffic means less stopping, so better gas mileage. It will also be cooler at night so I might be able to get away with not running the airconditioner.
 
I though some people might care: Just for the heck of it I just googled the gasprices in my hometown in Europe (and it's a major city) and almost stopped breathing when I saw that they are currently paying $8.80 per Gallon (!!!!). I guess we can consider ourselves lucky.:rolleyes:
 
Oh, I don't know but I think that some people actually do have the right to be worried about increasing gas prices. There aren't alternatives in some areas and their income isn't increasing along with the gas prices, groceries, etc. If you have a family living on a minimum wage salary and already scrimping, then what exactly are they supposed to save on by doing without? Not everyone goes out (much less to Outback) on a weekly or even monthly basis. I suspect that too many people think about their own income brackets & spending habits and don't take into consideration the large number of people who were having difficulty getting by before the ever increasing price of gas. Go ahead and increase gas prices but at the same time, someone needs to verify that there are alternatives for everyone and that people can actually afford them.
 
RayneeDeigh said:
I'm always kind of confused about why the US worries about gas prices so much. Here in Canada we pay about 125%-150% of what you guys pay and nobody really worries about the world ending.

It'll be okay, I promise. :laugh:
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Hahah. That had me laughing. I think it's just because we're not used to the gas being so high, and the prices rise every few days. Plus, everything is rising in cost (gas, food, rent, etc), yet the job market is TOUGH and our wages are not reflecting the continuous rise of the cost of living. Personally, if I don't get into a PhD program, I will definitely break a sweat because a BS in social science makes it hard to cut it.

PS- i just read other comments and see that it is similar to mine.
 
paramour said:
Oh, I don't know but I think that some people actually do have the right to be worried about increasing gas prices. There aren't alternatives in some areas and their income isn't increasing along with the gas prices, groceries, etc. If you have a family living on a minimum wage salary and already scrimping, then what exactly are they supposed to save on by doing without? Not everyone goes out (much less to Outback) on a weekly or even monthly basis. I suspect that too many people think about their own income brackets & spending habits and don't take into consideration the large number of people who were having difficulty getting by before the ever increasing price of gas. Go ahead and increase gas prices but at the same time, someone needs to verify that there are alternatives for everyone and that people can actually afford them.
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heck ya, I was making a sweeping generalization for the middle class haha. usually when talking about the overall picture, the middle is taken into consideration :) But yes I agree that the people that can't make the trade-offs/work in alternatives have a right in the worry department :)

edit- I did put it doesn't apply to everyone as well :-D
 
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