Pondering gas price psychology

July 1st, 2008
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First off, a very Happy Canada Day to all! I won’t wax maudlin on why I’m happy and grateful to live here, because I know our readers will feel the full spectrum of reasons for their own patriotism and affection towards their home and country. Onward to today’s topic.
Finally a voice of reason rang out amid the mob’s hoarse shouts of gasoline price woe. Given the prevailing oratorical ambience, remaining logical and calm made this one an entirely contrarian take. The Financial Post’s Garry Marr pointed out the seemingly obvious fact that driving a family nearly anywhere in North America is still far cheaper than flying or taking the train. That this would be a bold, iconoclastic, innovative and debatable standpoint shows how low the public conversation has sunk.
(On the bright side, the National Post’s archive appears to function at long last; the website makeover apparently was more than skin-deep.)
Perhaps because of the illogic of the gasoline price discussion – at least its news media manifestation – or perhaps because I’ve been trying to reassess my own driving habits calmly and pragmatically, with a view to saving money where it makes sense, I’ve been pondering just why people seem so particularly gripped by the issue.
I must first point out, as in previous posts, that we feel sympathy and understanding for those on a strictly limited income or with high family costs, for whom any substantial cost-of-living increase is difficult to manage. Our bafflement is directed at those who, if the news media reports are correct, are rushing to trade in a $35,000 SUV against a $60,000 hybrid in order to save $1,000 a year in fuel costs.
Why the apparent over-reactions like cancelled holidays, rearranged personal habits, etc., when so many other costly things – clothing, downtown lunches, new electronic gadgets of marginal utility – seem to roll off people’s budgeting radar virtually unnoticed?
One theory came to mind recently, which I bounced off some of my fiercest critics – Mrs. K. and Dr. J. – and seemed to make sense to them.
I start with the premise that the recent increase in gasoline and diesel fuel prices alone doesn’t justify the intensity of the negativity, nor the range of over-reactions. What could account for them? Perhaps, I thought, people are treating the entire fuel price – their whole bill at the pumps – as if that’s the increase.
How can this make sense? One way could be if the item in question was a traditionally immaterial cost in the buyer’s mind. In other words, if a tank of gas was just one of those things you grabbed on the way home, rushing in, swiping your card, filling up as quickly as possible, and hanging up the nozzle without even glancing at the pump display.
For someone who behaved this way for years, and only recently became alert to what filling the tank was doing to his monthly credit card balance, one can see how today’s price would be rather jarring. $100 to fill the Honda Pilot? Holy smokes! (Or other exclamatory.) Since the past apprehended cost was “zero” – suddenly the cost of gasoline is $100 “more” than before.
Johnny Canuck Driver now starts doing a whole bunch of math. A return trip to Vancouver or Whistler from Alberta: $300. A weekend at the cottage in the Kootenays: $150. A half-day-trip to K-Country: $30. Even a jaunt to the distant big box hardware store becomes a material component of the overall cost if you’re driving 30 km just to pick up a couple of garden hose couplings.
He or she could quickly lose sight of the fact that what’s in question isn’t the total fuel cost, but the year-over-year increase. For years it has cost $200+ to drive to Vancouver and back. The recent increase is maybe $100 – or far less than just the taxes and fees and baggage charges on an airline ticket. But in Johnny Canuck Driver’s mind, the entire price is the “increase” – the increase from a previously immaterial expense that was routinely ignored.
That all may seem a bit convoluted. But it’s the only way I can explain someone “discovering” that it will “suddenly” cost $600 to drive the whole darn fambly to see the Grand Canyon – then panicking or cancelling in anger, and instead blowing $3,000 on some tourism package “deal” instead.
Readers, what do you think?
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By John Weissenberger