As you drive by gas stations today, you can't help but notice the price of gasoline. Among all the items offered for sale in our economy, nothing generally commands a bigger sign for advertising its price than gas. Not the price of a house. Not the price of toothpaste. Not even the price of a car.
You can spot the price of a gallon of gas from 50 yards.
It's hard to get away from it. Gas prices are supposed to be important, determining how much of our disposable income we dole out for transportation and how much economic power foreign suppliers hold over the United States. It's a politically charged statistic, connected by history to the monopolistic corruption imposed on Americans more than a century ago by the Standard Oil trust.
All these factors explain a lot about why the price of gasoline seems to be on the minds of so many motorists, not to mention the news media, government regulators and economists. And, once again, the price of gasoline is going up.
A few weeks ago you could find gasoline for less than $1 a gallon, but now prices have popped back over the key psychological level of $1.
"We expect it to rise between now and spring," said David Costello, an Energy Department economist. "There is lots of room for the price of gasoline to go up, if you think 20 cents a gallon is a lot."
To some, it is.
"If I bought a sport-utility vehicle when gas was $1 per gallon and now it goes to $1.50 per gallon, I worry," said Michael Flynn, director of the University of Michigan's Office for the Study of Automotive Transportation. "It bothers me. Toothpaste, you don't buy as often, and the price fluctuations you don't notice as much."
Because of its recent no-interest financing promotions, a lot of people bought General Motors sport-utility vehicles and trucks, Flynn said. "Those people are going to be very upset when gasoline gets back to the levels of last summer, when gas was $1.70 per gallon."
But the price of gasoline is so cheap by any historical standard that consumers should dismiss a 20-cent-a-gallon increase. Indeed, they should easily absorb a $2 or $3 or $4 price rise.
It would take $5-a-gallon gas to radically change consumer behavior, given the historical relationships price of gasoline, average household income and the fuel efficiency of the vehicles we drive, experts say.
