Gas prices here and there

Gas prices are tough all over. For years, Europeans have lectured us about our profligate ways with petroleum. We deserved the lecture, no doubt about it, but even so I’ve always felt that judgmental Europeans have portrayed themselves as virtuous and far-sighted when in fact they were simply responding as anyone would when faced with a much higher price. It was economics and not virtue that pushed them onto the moral high ground. Or rather, high enough prices make virtuous environmentalists of us all.

Here’s an LA Times article on the price of gas everywhere else in the world: Gasoline prices hit harder outside the US. As you might expect, the places that have significantly cheaper gasoline tend to be petroleum exporters. In Venezuela, Iran, and Saudi Arabia, gas still costs less than a dollar a gallon. But for the most part, we still have it pretty easy compared to everybody else.

The moral of the story is: don’t whine, it’s much worse elsewhere. That’s fair enough, but there’s an interesting fact hidden in the list of prices: the most expensive place to buy gas in the entire world (according to their list) is Norway. But Norway is an oil exporter. Russia, Norway, Mexico, and Kazakhstan are the world’s largest non-OPEC net oil exporters (data from 2004). This tidbit forced me to update my thinking regarding smug Europeans. I might still begrudge a lecturing Frenchman, but the Norwegians have earned the right to take us to school. They have the oil, and they still tax themselves into the stratosphere.

Well done Oslo! By the way, would you be interested in a slightly used Humvee?

Irrational gas-buying behavior?

Books on the imperfect psychology of financial decision-making are popular these days. In works like Predictably Irrational, we hear story after story about how people make bad decisions, generally along the lines of being penny wise and pound foolish.

What do you think about the following situation? With gas prices heading ever upward, web sites like have become popular. Drawing on the contributions of readers, GasBuddy will show you a nifty map of where the cheapest gas is near you. Assuming you don’t take big detours to do so, you can save money by consistently patronizing the cheapest stations. But here’s the thing: the money you save is only the difference between the best and worst price. So while your change in behavior, a change triggered by high prices, may genuinely save you money, it can’t save you any more money than it would have when the prices were low.

In other words, you could have saved that same money last year, but (relatively speaking) you weren’t pissed off about it then.

Is that irrational behavior or not?