Responses to higher fuel prices

Observing how people are responding now to higher fuel prices gives us some idea about how people will respond to a price on carbon under an emissions trading scheme.

In the short term, we can expect pain on households and businesses as their usual ways of doing things become more expensive. In the slightly longer term, people adjust by finding different ways of doing things: driving less, taking more public transport. And in the longer term, people make bigger adjustments like buying more efficient cars or moving closer to work.

We're definitely seeing the short term pain and the immediate political pressure to do something to bring petrol prices down. And we're also beginning to see people adjust - an interesting example is truckies choosing to take the ferry across the Spencer Gulf in South Australia rather than driving around it:

South Australian ferry operator Sea SA says figures for the June quarter show a doubling in truck traffic compared with the same part of last year.

Justine Day from the company says the main attraction is saving money. "We're being told by people in the industry that this is because the price of fuel which is, as we all know, at record highs at the moment - it's actually making the ferry a more attractive option than driving all the way around the Spencer Gulf," she said.

This also shows an advantage of using prices to drive changes in behaviour to reduce emissions, compared to government-dictated solutions like banning incandescent light globes or subsidising solar panels on roofs: you get a whole lot of unexpected and locally appropriate methods of reducing emissions coming out of the woodwork.

It also shows though that the effects can be somewhat unpredictable - would you necessarily think that a South Australian ferry company would benefit from emissions trading?

Adjusting to higher energy prices will no doubt be painful and difficult, but probably not as painful and difficult as people think: because innovative businesses will come up with ways to ease the transition - earning profits for them and reducing the costs for others.

Drivers with bumper stickers are road ragers

My favourite subject at uni was social psychology. The experiments we studied were brilliant and most seemed to have a sense of humour. I love this one reported in Monday's Washington Post:

[Social psychologist William] Szlemko said that, in an as-yet-unpublished experiment, he conducted tests of road rage in actual traffic. He had one researcher sit in a car in a left-turn lane. When the light turned green, the researcher simply stayed still, blocking the car behind.

Another researcher, meanwhile, examined whether the blocked car had bumper stickers and other markers of territoriality. The experimental question was how long it would take for the driver of the blocked car to honk in frustration.

Szlemko said that drivers of cars with decals, bumper stickers and personalized license plates honked at the offending vehicle nearly two full seconds faster than drivers of cars without any territorial markers.

Szlemko's theory is that we inhabit different kinds of private and public spaces: private (your home), semi-private or temporarily private (your work office / cubicle) and public (a park / road). Actually a road can be confusing because we're simultaneously inhabiting a private space (our car) and a public space (the road). We're hard-wired to defend our territory and people who mark their territory by personalising their cars with bumper stickers are more likely to think about their own private space than the public space they're sharing when they're on the road.

It's an interesting article.

HT: Marginal Revolution.