My favorite economist, author of Freakonomics and University of Chicago professor Steven Levitt, argued the record-high price of gasoline this summer was not the financial crippler it was made out to be.
The public, Levitt said, is made hyper-aware of the price of a gallon by the surreal broadcast of large gas station signs on every street corner in America. In this way, any person driving any sort of distance will be made aware of every up or down tick several times a day. If the price of a gallon of milk was subject to the same kind of public discourse, Fareed Zakaria might have written something about the need to lessen dependence on foreign cows.
That being said, I’m glad gas is now on its way to dip below $2 a gallon. In fact, I witnessed a gas station on Woodward offering gas at $1.99 with the purchase of a car wash.
I find it funny that when gas was at $4.15 a gallon, it was being hailed as a sign of the apocalypse, or at the very least, the end of America’s superpower stature.
Then our housing market crashes, the stock market implodes, the government flirts with Socialism, and the price of gas quietly cuts itself in half. Can we break out the American flag unitards yet? Or at least brush the dust off?
When the price of a barrel of crude closed at a record high of $147.27 on July 11, market analysts were scrambling for an answer as to why. One theory put forth by a number of people was that speculation made up for a large portion of the over-inflated price.
This theory held that, for a simplistic explanation, people traded petroleum at higher and higher values in the anticipation of values rising continually and reaching absurd prices of $250 or $300 per barrel of crude. This future panic was based on many fear factors, including the emerging automobile markets in the population-dense countries of China and India, as well as a production crippling conflict in the Middle East.
I believe that because some of our nation’s largest investment banks, such as Bear Stearns, Lehman Brothers and Merrill Lynch are either bankrupt or being bought up for pennies on the dollar, the irresponsible speculation on gasoline has been, effectively, put in it’s grave.
It seems that now, for the time being, everyday consumers are setting the demand curve for gasoline and by that logic, the price. It is the use of our cars, our plastic bags, our asphalt and our other petroleum-based products that will determine gasoline’s place in our economic future.
My tips? Use water-based sex lubricants and buy an electric car.
