Behavioral oilconomics and the politics of emotion

The current political debate about oil drilling in the Alaskan National Wildlife Refuge and continental shelf areas has reminded me again that humans are not a rational species. Of course, I know from my 25 years in the marketing world that we all feel first and think later. Incidentally, that’s why we feel so angry at advertising. We suspect that we’re being manipulated; we just can’t figure out how. The feeling is perfectly true; good advertising does tug on our emotions in a way that leaves reason far behind and panting to catch up. But don’t blame advertising for that; blame evolution. Our brains developed to feel, not to think.

That’s not just my idea. The Princeton economist Daniel Kahneman http://en.wikipedia.org/wiki/Daniel_Kahneman won the Nobel Prize in 2002 for his experimental work in behavioral economics – the science of how humans make irrational decisions in even that most rational of worlds.

So what’s that got to do with oil? Leaving aside the question of profit motive and the false hope of lower gas prices, the drilling proponents are tugging at our patriotic emotions by setting up false enemies (environmentalists, Government, etc.) and by calling the oil in question “our” oil, as if it belonged to you and me and would be siphoned directly from Alaska into our gas tanks if only the heroic oil companies were freed from the chains of mindless regulation. Of course, it’s not “our” oil. It would be “their” oil. It would belong to the international oil companies and they would be free to sell it to anyone they please – most likely Japan and China in the case of Alaskan oil – at whatever price the market will bear.

A cold-eyed patriot with a long-term concern for American security would instead look at this oil as “our” strategic reserve, to be saved to fuel our F-16s when things really go to hell in the Middle East, or at least not to be sold until oil gets to $1,000 a barrel, which it will eventually, and to be nationalized if necessary.  Let's burn the other guys' oil first.  A patriot would say that the USA should get busy improving the energy efficiency of everything we do. That would create American jobs, reduce us from foreign dependence and spur new technology.

But that doesn’t provide nearly the emotional rush of more drilling, does it?