Question

why economists, unlike the general public don’t get extremely nervous when the price of something like gasoline increases by a significant amount? why global warming is not like high prices for a product and why economists would probably be nervous about global warming?

Answer 1

Economists, unlike the general public do not get extremely nervous when the price of something like gasoline increases as they know that this is happening because of some short term demand/supply fluctuations. They also realize that this would rectify itself in the long run. For example, the price of gasoline might increase in the short run because of sudden supply side shock ( like an unfortunate explosion at an oil rig which might reduce the oil supply temporarily). However, they understand that this would be sorted out soon and the equilibrium would be restored in the long run.

The same economists however be nervous about global warming because global warming can cause permanent shocks in demand or supply. For example, global warming may lead to melting of ice caps that can lead to increase in ocean sea levels which can lead to some oil wells being being shut down due to increased level of danger in the operations. This can lead to a permanent decrease in the supply of oil which in turn can cause a permanent increase in price levels of gasoline.