by kjmclark » Sat 04 Aug 2007, 09:51:13
$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('kjmclark', 'T')he problem with this poll is that it takes gas prices in isolation, when it's more likely that all petroleum based, produced, or transported products would also at least triple.
Yes, but it is with transportation that we must start, as that is the big user and where it will be felt the most.
Hard to do an all-encompassing poll.
Sorry, Monte. I keep complaining about polls and having to apologize later.
What I should have said is many people forget that as gas prices rise, just about everything else will rise in price as well, and - this is the important part - most people's income won't rise at the same rate. One way to capture this in a poll would be to say "Assuming your pay doesn't rise, how high to gas prices have to rise to curb your demand?" Then the options might be:
-$4 per gallon, with food prices rising 10%
-$5 per gallon, with food prices rising 25%
-$6 per gallon, with food prices rising 50%
-$7-10 per gallon, with food prices doubling
-$10 or greater, with food prices quadrupling
I don't know that those food price inflation numbers would match the gas price increases like that, and other prices would be rising as well, but this at least points out that other prices will be going up too. I think a lot of the general public sees a poll like this (we have them all the time in the Detroit area) and thinks "if gas prices go up but nothing else does." This goes along with the thought that "it's the rotten oil companies gouging us, and decent sellers of other products wouldn't be so evil." But the gas prices won't rise in isolation.
It reminds me of the ethanol lobby point this week
(story here). Popcorn prices are rising quickly at the supermarket and cinema and ethanol is being blamed. But as the ethanol lobby pointed out, you can buy the popcorn from the farmer for $5 a bushel or so, or you can buy a tiny little bucket of popcorn at the cineplex for that same $5. The actual popcorn is only about a penny of the cost of the bucket of popcorn, so a doubling of corn prices should only cause a 1 cent rise in the cost of that bucket of popcorn. But the price at the cinema is rising 25 cents or so.
The real story is that increasing costs at the pump are feeding through the economy, raising prices for many things. The accumulating price increases, without a corresponding increase in pay, that will break people's budgets. They'll actually cave at a lower gas price than they think, since they'll run out of money paying higher prices for other things as well as the higher price for gas.
Or, as markets suggest this week, they won't be able to borrow anymore and they'll lose their job, making the current price unaffordable.