As the chart indicates, for the 3rd time since 1960, cost of owning a car is just about the same as cost of driving it. To me, this is a good tipping point indicator. What is fascinating though is that probably none of the purchasers of cars did this calculation in their head before buying the car. It's highly unlikely that they did ANY sort of calculations (if we take average of U.S population and multiply that by love of math....) before making the decision on auto purchases. Yet, just at a point when those two paths cross, we have stopped. Of course, it could just be a coincidence. Also, we have to point out (embarrassingly) that the expenditure is not just on gasoline but on all energy goods. I'm still fascinated.
Tuesday, July 8, 2008
Why Gasoline hit the Tipping Point
Why Gasoline hit the Tipping Point People say in America, $4.00 was the tipping point for gasoline price. I always wondered why it was at $4.00 They can argue it started taking up way too much of the consumer spending pie. (MarketWatch) Others can argue that the rate of acceleration could have hit the point of halt. However, it seems like Floyd Norris found the answer - (NYT via TBP) Behold his chart. As the chart indicates, for the 3rd time since 1960, cost of owning a car is just about the same as cost of driving it. To me, this is a good tipping point indicator. What is fascinating though is that probably none of the purchasers of cars did this calculation in their head before buying the car. It's highly unlikely that they did ANY sort of calculations (if we take average of U.S population and multiply that by love of math....) before making the decision on auto purchases. Yet, just at a point when those two paths cross, we have stopped. Of course, it could just be a coincidence. Also, we have to point out (embarrassingly) that the expenditure is not just on gasoline but on all energy goods. I'm still fascinated.
As the chart indicates, for the 3rd time since 1960, cost of owning a car is just about the same as cost of driving it. To me, this is a good tipping point indicator. What is fascinating though is that probably none of the purchasers of cars did this calculation in their head before buying the car. It's highly unlikely that they did ANY sort of calculations (if we take average of U.S population and multiply that by love of math....) before making the decision on auto purchases. Yet, just at a point when those two paths cross, we have stopped. Of course, it could just be a coincidence. Also, we have to point out (embarrassingly) that the expenditure is not just on gasoline but on all energy goods. I'm still fascinated.
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