Run on the (Energy) Bank

Within the world of energy there are constantly ups and down in the market. Swings and vacillations change the moods of consumers at, what seems to be, a nearly daily basis.

Why are people so sensitive to shifts in energy prices?

My first theory on the sensitivity of energy prices is due to the universality of energy costs. EVERY homeowner pays for electricity (in some way) and EVERY car driver pays for gas (in some way). Because everyone is exposed to a market rise in pricing, and likewise a market fall, it creates a system in which individuals are unable to escape the pricing circumstances.

This constant exposure runs contrary to many other goods. Consider: food is eaten by everyone, yet due to the periodic nature of seeing food prices, people are not ALWAYS aware of, say, a 2 cent change in the price of Bananas.

Thus, because people are constantly exposed to energy prices throughout their day to day lives, people are constantly attuned to shifts in the market, for better or worse. This hyper sensitivity is coupled by the second factor.

The second factor effecting energy mood is that energy prices shift SO frequently. Especially at the pump, the variation in price is astounding. Not to mention, geographic variation plays an uncanningly large role in how people perceive their gasoline and driving mood. For instance, I recently drove from New York City to Portland, ME. On my trip, the price of gas changed from $4.10 to $3.42. A rather significant alteration.

What does this mean? It means that people are so super in tuned to the price of energy that they have failed to accept any variation (for the worse). Perhaps this is the fault of the petrol/ gas companies for altering their prices off of temporary whims as opposed to implementing a more conventional pricing model.

However, when the population has become so hyper sensitive to energy variations and fluxuation, it has created a delicate and, rather fickle, situation for many politicians. They are forced to cater and counter to the every varying nature of the energy industry, and as such are unable to actually implement energy policies that would yield long term success.

Regardless, energy sensitivity is a fact that we are forced to deal with. However, I would heed individuals to slow down their thought when they see gas has jumped up 5 cents. It may be for the better in the long run. After all, when the time of the crunch does come, we don’t want a run on the bank so to speak.