Monday, February 27, 2012

Rising Gasoline Prices, The Tipping Point, and the Political Anger Factor

An item worthy of examination is the political anger factor regarding the gasoline price tipping point. The tipping point being the price per gallon of gasoline that causes consumer expectations to plummet, causes a drastic cut back in driving and consumer purchases.

The Political Anger Factor and the Political Anger Factor Regarding High Persistent Unemployment

The political anger factor is a wide spread resentment by the electorate directed at an incumbent. In political economy a common example of the political anger factor is persistent high unemployment, especially when unemployment approaches 10%, the political anger factor [the summation of the electorate's anger] is exposed and rises exponentially and this exponential level of anger is directed toward the incumbent.

The 10% figure of high persistent unemployment in the traditional political anger factor proposition is merely an observation of averages. That is, future data may point to 8% or 11% as the point that the political anger factor regarding unemployment goes exponential. Further, those unfamiliar with political science or political economy likely have no earthly idea about the political anger factor proposition. They notice more anger but have not studied the trend. That is, the knowledge is not widely disseminated.

The Political Anger Factor Regarding Gasoline Prices

The “tipping point” in gasoline prices, on the other hand, becomes a “chosen” line of demarcation by pundits, media types and talking heads and much less a historical trend or historical average. That is, the chosen number is more notional and much less finding its roots in historical underpinnings. One might say the chosen number has political aspect more than empirical aspects. Hence the average Goodfellow uses the number they see in the media as the actual number or at least the subject number regarding tipping point. One might call it the “headline tipping point”.

This particular point of demarcation aka tipping point is knowledge wide spread albeit the tipping price number may be incorrectly pegged. James and Jane Goodfellow, if interviewed, will many times recite the very “headline tipping point” offered through media. Stated alternatively, headline tipping point becomes a buzz number and the buzz conversation. It may even trump small talk about the weather.

Hence we have a number “chosen”, we have widespread knowledge of the supposed correct number of the tipping point, and now we have “measurement“. One merely looks to the gas station marquee sign for “price” and one watches the price go up on every gas station one passes. One might say immediate feed back is everywhere.

A final point to examine is the number exposure units. Consider the political anger of the 90% employed vs. the 10% unemployed (from the example above). Exactly how politically angry is one if one is part of the 90% employed? Yes, there is the “what if I’m next” factor, and the “business would be better if unemployment where lower” factor, but if one is employed, exactly how outright angry does one get? More like a boiling resentment than outright anger. What about gasoline? Lets try +/- 90% are effected by rising gasoline prices. Boiling resentment becomes outright anger.

Which begs the question: if an incumbent has high persistent unemployment just below the exponential line i.e. 10% and simultaneously experiences rising gasoline prices approaching a tipping point, exactly what level of political anger ensues?














1 comment:

  1. The recent price inelasticity of gasoline has been impressive. I think much of the price sensitive consumption has been destroyed. Typically, energy costs above 6% of income causes households to curtail other spending. Given the fall in natural gas prices since 2008, and the destruction of marginal demand for gasoline, it seem likely to me that households will seem to be more tolerant of high gas prices.