To many Americans, cars aren’t just a mode of transport, they’re a symbol of freedom too. But who do US consumers hold responsible when soaring petrol prices mean there’s pain at the pump? The FT delves into the psychology behind filling up and explores petrol’s ability to fuel social unrest and even bring down presidents.
We’ve actually got the highest vehicle miles per capita in the world cars are a critical part of the american psyche very few americans live within walking distance of the places they want to go in their normal everyday lives they bestow upon people an element of freedom a way of getting from a to b as you want when you want how you want we drive we have open
Roads and we expect to have the freedom that provides if you look at the average american household buys about a thousand eleven hundred gallons a year of gasoline americans drive more therefore they spend more money on gasoline therefore they’re going to be hit harder when the price goes up they don’t particularly like to buy gasoline they don’t window shop
For gasoline they buy gasoline as a means to an end there aren’t that many things that americans can see firsthand as signifiers of economic well-being but gasoline is one of them we end up focusing more on gas prices and their inflation rather than the price of many other goods it does come to impact a lot of their life and lifestyle pretty immediately it
Affects consumer attitudes and consumer views about their financial well-being and it’s it’s visibility and the fact that it’s connected with personal transportation which is so important in american culture because we are so dependent on our vehicles to get around we’re going to pay whatever it takes it’s going to hurt and we hear that hurt proclaimed really
Loudly there are two modes in energy policy in the united states 97 of the time ignorance blissful ignorance no one thinks about gasoline no one understands the oil market no one really cares about the energy sector and then there’s three percent of the time if you go back over the many decades when gasoline prices are rising of sheer terror that’s the reason
Why the american consumer reacts to gas prices that if the gas prices were what they were before i could have done more i would have traveled more i would have visited more places i would have gone to a restaurant that is a special place for me and my wife for example that i’m not doing now because the gas prices are high it has killed that little dream that i
Had of doing things i don’t want to make it sound as grandious as killing the american dream it is certainly muting the american tree the price was already going up significantly coming into 2022 people were flying again they were taken to the roads again big industry that sucks up a huge amount of oil was cranking back into gear so as crude prices ratcheted up
Coming into 2022 the price of gasoline was also ratcheting up quite rapidly then vladimir putin sent tanks across the border into ukraine and sent the world into a period of geopolitical turmoil we tend to have lower taxes which americans of course enjoy but that means when there’s a change in the price of crude oil which is by far the most important determinant
Of pump prices it shows up at a change in a change that consumers see more so than around the world how do americans measure economic well-being well they see the pump very frequently and who do they blame when they’re unhappy well they see the president pretty frequently too so it becomes a big problem for someone in the white house when america’s most visible
Economic signifier of well-being is going up their approval goes down there is an easy dare i say lazy heuristic that consumers and voters employ which is it’s that guy’s fault because he’s supposed to make sure that everything is peachy all oil price spikes and i mean every single one they cause recessions so they ended president carter’s career and they ended
President bush seniors career few things terrify an elected official of either party more than spiking retail pump prices a president doesn’t have really good options i worked for president george w bush 2001 to 2003 we had our energy price and our oil price scares as well we used to joke bob go get the magic wand to make oil prices go down there is no magic wand
Is it fair to blame the president when global petroleum prices move or when global refinery capacity is impaired of course not but politics isn’t fair politics is not the science of fairness it’s the science of the possible and it’s extremely possible for voters to vent their outrage at a president just because of a high price i’m asking you for your good and
For your nation’s security to take no unnecessary trips to use carpools or public transportation whenever you can to park your car one extra day per week there’s very little a president can do and yet there’s almost 100 certainty that the american people will blame him for not doing enough that hasn’t stopped the president from trying from releasing record
Amounts of oil from the strategic petroleum reserve cutting some environmental regulations at the pump to pleading with foreign oil producers and domestic oil producers to pump more he’s been pursuing a policy of increasing oil production rather than restricting it which is what is often alleged by many of his political opponents in europe they’ve said turn down
The thermostats and you’ll find your way to freedom uh in the united states we have a historical example president jimmy carter put on a cardigan and said the same thing and he lost his re-election there’s no way that i or anyone else in the government can solve our energy problems if you are not willing to help there is often an argument made due to reasons of
Political expediency that a die-hard environmental agenda at the expense of the american consumer is what is driving high prices at the pump in fact you could argue that this president has done significantly more to bring prices down at the pump for american motorists than many if not most of his predecessors the president’s biggest move to date has been to draw
Down the strategic petroleum reserve for oil and that is an extraordinary move he is in fact burning more strategic barrels than all presidents before him when you find yourself in one of these gasoline price spikes you’re out of good options from the start and so really you have to start thinking about medium term options there’s a challenge here and this
Is a good preview of what that challenge might look like in the end restricting access to the resources we’re using without adequate supply of alternative sources means a higher price now are we willing to live that way well that’s a question society is going to have to judge when it comes but the early judgments we’re seeing right now is that no we’re not we
Could end up in a position where people just sort of get used to this price environment the longer that consumers see a high oil price environment the more they’re willing to say hey maybe next time i should buy a more fuel-efficient vehicle or maybe i should buy an electric vehicle i think the strategy of making electric vehicles an attractive car something that
People want to drive really does kind of work in the direction of the american psyche in my view this will end up with governments easing decarbonization policies and going back to sort of the obama biden approach here in the united states which said look we have to get to a clean fuel future but the bridge is a multi-decade bridge you just don’t do it overnight
It just simply can’t happen unless we resort to draconian policies that you normally see in north korea or belarus or you know the khmer rouge type of thing if we emptied cities and imposed draconian restrictions on personal freedoms and transportation we could do it but i don’t think democracies are going to do it and look what’s going on what happened when
France tried to put a teeny little carbon tax on diesel you had the yellow vest protest and they withdrew the policy kazakhstan was the latest country to try and remove fuel subsidies lpg they almost had a color revolution actual unrest isn’t likely to come from prices but from shortage itself and we could get to a world of shortage right now the sanctions that
We have designed in the west are pushing supply off the market without adequate replacement the result of that could very well be shortage i was asked fairly recently in a media interview whether there is any bright side to high gas prices and i went on the limb and said yes maybe people will rethink the way they take fossil fuels for granted
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Are high petrol prices killing the American Dream? | FT Energy Source By Financial Times
