On the Subject of Gas Prices…

Another C+C News Update. Found this while browsing links from the Wall Street Journal article referenced in Shifting the Focus Away from Oil. Called AP IMPACT: What makes up the price of gas?, it starts off as a fairly linear description of the crude oil refining process and its impact on prices. However it quickly digresses into a number of vignettes on the other elements of price people are paying at the pump. One interesting story sheds some light on the non-rational, non-linear elements at play:

Kelly Bosley, who manages Rutter’s, doesn’t even have to look across the highway to know when Sheetz changes its price for a gallon of gas. When Sheetz raises prices, her own pumps are busy. When Sheetz lowers prices, she has not a car in sight.

She calls Rutter’s headquarters to report the competition’s new price and wait for instructions.

“I call a lot of times and say, ‘They went down, hurry up! Hurry up! Call me! Call me!’ Or it could be where theirs goes up, and I’ll say, ‘Take your time! You know, I like being busy.’ But I have no control over that.”

You think you feel helpless at the pump?

The point is its not poor Ms. Bosley who’s responsible or the greed of the oil companies or the oil producing nations. It is a constellation of interlinked, inter-related phenomena that inter-influence each other. Ms. Bosley, the oil companies, oil producing nations, increase demand for oil in China and India, car sales in those nations and others, the fluctuation of the dollar against other currencies, unemployment rates, etc. are all to “blame”. A cause becomes an effect and vice versa. Linear reasoning in this wicked mess will only up our frustration and sense of powerlessness in the world.

We need to take a few steps back and see that we are dealing with a complex system of relationships. It is the interaction of these relationships that affect the price of gas. 

Try this: put all the causes in the article in different areas on a piece of paper and start drawing lines between them as you think of connections. You have just made a crude map of the system. As you can see it is definitely not of the linear, cause and effect family of problems. The next step is studying the nature of the connections between these diverse elements. From there it is possible to design an entry point for an intervention to alter the system. More on influencing and affecting systems later.

Tags: complexity, gas prices, oil prices, systems thinking