This past week, with Hurricane Ike bowling into Texas and allegedly wiping out the US’ ability to refine oil, a lot of people panicked, really really badly. Despite oil prices dropping to nearly $90 a barrel, and wholesale gas prices at almost $2.50 a gallon, gas prices for us consumers actually went up, in some places as high as $5.00 a gallon.
Why? Not because of supply and demand. Not because of any actual effect by the hurricane. It was all because people panicked. And it proves that the price of gas these days has little to do with actual world events, and more on what people merely think the commodity might be worth and how rare it’s becoming.
And now the “experts” – the same ones that said we’d see $200/barrel oil by now – are trying to explain this one with new theories.
Experts say that when a perception exists that gas is limited — warranted or not — consumers flock to the pumps even if officials implore them to stay calm.
It’s a combination of fear, desire, distrust and protectionism, experts say.
“When you have a perceived scarcity of any product, research shows the attractiveness of that product goes up,” said Dr. Rao Unnava, marketing professor at Ohio State University.
Unfortunately, there are so many panicky petes in society driving the stampede that it doesn’t seem like there’s much that rational people can do, except maybe follow the stampede in order to protect themselves. To stay calm and only buy gas when you need it means you get punished with the inflated price, after everyone else has topped off. Or worse, you end up high and dry with no gas at all.
So why are prices high, and why is our economy in a rut? Sadly, the answer is simple: it’s because people are stupid. Case in point:
