Have you ever noticed that gas prices just keep going up, up, up? Actually, they don’t, at least not in a micro sense. It just seems that way.
In reality, gas prices fluctuate pretty widely over time due to a number of factors, including transitions from winter to summer blends (and back again), hurricanes that disrupt production and/or refining in the Gulf region, unrest in the Middle East, variation in the strength of the dollar, and so on and so forth.
As it turns out, however, the major media outlets really only seem to pay attention when gas is getting more expensive. Consider the following graph put together by the good folks over at NPR’s Planet Money (data from Bloomberg and AAA).
Notice how the coverage of gas prices seems to track the prices themselves? The correlation isn’t perfect, but there’s a clear association. Note that the spike back in January coincided with talk of tightening the Iranian oil embargo and the expectation that such action would result in an increase in the price of gas.
Of course, gas prices will inevitably rise in the long run due to ever-increasing demand, dwindling oil supplies, and increased costs associated with extraction and refining. But in the shorter-term, the perception that gas prices are always on the rise is just that — perception. And it’s largely driven by the media.