Why gas prices really aren’t that high
A McDonald’s hamburger costs around 80 cents, but when my parents were young, I think they were around a dime or something. But nobody complains about the price of a McDonald’s hamburger. Prices rise. It happens.
People my age grew up with gas that was considered expensive any time it broke $1. Now, there are growing outcries as the price tops $3.50 (regular unleaded, OKC prices). True, this over 300% increase has happened largely over the past eight years. Such a rapid move up in prices on a product we all use is sure to get attention.
But here’s why I think gas prices aren’t really that high — because demand for gas hasn’t fallen off. Most reports have shown that throughout this dramatic move up, people have continued to consume gas at the same rates, and I’ve heard some speculate that oil will have to reach $150 per barrel before demand really lessens. I know I’m just an outsider looking at this from a limited perspective, but I also know that in my own life and the lives of most people I know, our driving habits haven’t truly changed much in reaction to the rising costs.
So if gas can increase 300% without seeing much change in demand, I don’t believe it’s overpriced. Rather, I believe it was artificially under-priced previously.
When demand falls, prices will stabilize. But for demand to fall, we’ll have to make some changes. We’ll have to start treating energy like any other budgeted item — separating what we “need” from what we “want” and managing our consumption accordingly. Businesses might have to do more web meetings to reduce their airfare costs. Families might have to recognize that every trip, even in town, has a price tag, then let that impact the number of trips taken.
How do you plan to adjust your energy consumption in response to the rising prices?