Communicating Variability

Communicating with a non-statistical public about issues of variability is enormously difficult. I deal with this all the time with respect to weather. How much warmer (colder) is it today than “normal”?

The Energy Information Agency’s “This Week in Petroleum” had a great discussion of the issue Thursday with respect to the prospect of $4 a gallon gasoline. It’s a huge marker out there, but what do we mean when we talk about $4 a gallon gas? As a practical matter, we’re probably thinking about the first time we see that magic $4 at any gas station anywhere in our field of view. But TWIP nicely sorts out the problem of both spatial and temporal variability associated with the price of gas:

Many recent inquiries have asked about the prospects for $4 per gallon gasoline, but what they are really interested in is if they will be paying $4 per gallon at their gas station. In EIA’s March Short-Term Energy Outlook (STEO), the U.S. monthly average retail regular gasoline price is projected to peak near $3.50 per gallon in May and June. It is important to note, however, that even if the national average monthly gasoline price peaks near that level, it is possible that prices during part of a month, or in some region or at some stations, will cross the $4 per gallon threshold.