A national obsession

June 8th, 2008
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It’s easy to understand why people are annoyed about high gasoline prices. It’s not hard to figure out why they’re concerned. One readily feels empathy for families on limited incomes who must deal with long commutes or other chores that they can’t easily work around, and for others who already drive modest vehicles and don’t know what more they can do.

But this national obsession with gasoline prices? Dr. J. and I just don’t get it. (An admission that, one supposes, our critics would gleefully cut and paste into innumerable applications.) It appears to be a sociological phenomenon that can be observed and catalogued – but cannot easily be explained.

Numerous things take a larger bite out of one’s budget than gasoline, and several of these fluctuate as much or more. A single-point swing in interest rates, for example, adds not merely dollars, or even rapidly flipping 20s, but tens of thousands, to one’s costs of owning a home. Yet Canadians en masse voluntarily pay such vast sums merely for the peace of mind of knowing that the payments won’t go up – or down. How? By deliberately locking themselves into costly fixed-rate mortgages.

Ah-ha, you say – that’s the point. Certainty. People hate uncertainty. Yes, we know, Canadians are notoriously risk-averse. But Americans aren’t, and they seem nearly as enraged about high fuel prices as we.
The Doc ventured the proposition that people have come to see the provision of motor fuel as a form of utility. It’s something that people think should be constant and predictable precisely because of its commoditized nature.

Canadians don’t like unregulated utilities – even Alberta’s transition to a market-based electricity system was mighty unpopular, widely misunderstood and outrageously exaggerated. Sound familiar? So, Dr. J.’s theory goes, that $5 or $10 surprise at the gas pumps offends our alleged Canadian sense of fairness, and we demand that the government “do something” the same way that it controls electricity rates in most provinces.

This explanation is still not quite satisfactory. Government-regulation-wise, the Euros are diaper-clad adult babies to a degree even greater than Canadians. Yet they seem to have resigned themselves to high fuel prices decades ago – engaging in a gigantic Gallic shrug from Poland to Portugal. In some cases, actually blaming themselves for the situation and seeing every use of their vehicle as an essentially immoral act. In Europe, it’s those who require fuel to earn their living who jump up and down in rage – British truckers (including what appeared to be at least one exotic dancer or swimsuit model who’d taken an odd career change), Breton fishermen.

You also have to add in widespread economic ignorance. A recent sub-headline in the Globe and Mail read: “Despite pain of high prices, there are no shortages or lineups”.

No, dummy, it’s because of high prices. The price mechanism is being allowed to do its job, at least for now. Real shortages occur only due to physical disruption – breakdown in the distribution system – or when governments intervene to prevent the market from working.

In the 70s, OPEC imposed an oil embargo on western countries. Today, high prices are driven by a combination of soaring consumption (especially in fast-growing developing countries), declining production (due to incompetence of corrupt and dictatorial governments in producing nations) and a massive increase of hedge fund investing in crude oil futures.

To be fair, the Globe story’s author discussed these historical differences in an article that stood out precisely for its reasonableness. The article also talked about “shock” and “panic” among the motoring public. These seem accurate descriptors. “Calm assessment”, followed by “rational reordering” of priorities, could only be applied satirically. Especially when one imagines people racing to trade in an aging SUV, receiving perhaps $5,000-$15,000 and then spending $30,000-$50,000 on a more fuel-efficient vehicle, all to save maybe $1,000 per year. It just doesn’t add up.

Or, am I way off-base here? Is that in fact how most of us are dealing with the situation? Are millions out there taking similar measures as what this ignorant lout out at the RRC has figured out – combining two lax trips to the hardware store into one better-organized mission, always using the smaller vehicle for the utilitarian commute, cutting out genuinely frivolous rides, which adds up to quite a bit saved without any measurable restriction on the overall lifestyle.

Is perhaps the rest of it just media hysteria, like coverage of the latest health scare or big road accident? Are those Canadians interviewed “spontaneously” at those pump-side “streeters” just saying what they think everyone expects to hear, lest they appear as saps? Readers, what do you say?

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