John Whitehead wonders if the demand curve for gasoline is kinky at $4 a gallon.
Is the demand for gas kinked at $4?
Gasoline prices soared again Thursday in Charlotte and across the country, and motorists were grumbling again at the pumps.
But it appears as if $4 a gallon might be the point where the price of fuel makes a major difference in our lives.
Possibly, because the $4 barrier - in nominal terms since people don't think in real terms - is one that hasn't been reached on average in the US since mid 2008. But let people get used to it for awhile and the kink, if it's there, will smooth out.
Then there's also the elasticity of demand, which for every good, including gas, is lower in absolute value terms in the short run than in the long run.
"People still need to drive to work, they still need to take their kids to school, they still need to do all the things they did before so people are still going to use the same amount of gas," he explained. "It's just going to cost them more and that means they have less money to spend on other goods and services."
But high gas prices - actual and expected - leads to people (pursuing their own self-interest, of course) to help others save gas. To wit.
Ordinarily, you want a GPS navigation system to show you the quickest way to get where you're going. But with gas prices over $4 a gallon in some cities you might rather know the way that uses the least gasoline.
Some new navigation systems can now do that.
What other technologies will be widely-employed to help drivers save gas?