Critical Thinking

by Marc Rounsaville on March 13, 2012

I would rather be lucky than good. We have all heard this homily and many of us have probably said it. I know I have. And I know deep down that I would rather be good than lucky. (Actually I would rather be both.) I know I can’t depend on luck but I can depend on skill. In the realm of decision-making one skill, a huge one, is critical thinking. More than anything else, mastery of this skill will improve the quality of your decisions. You may not have the time or resources to dig deep and do an exhaustive analysis of a situation. But regardless of the setting and without exception, you can without exception apply critical thinking skills to issues and problems.

Let’s use the debate on the increase in gas prices to demonstrate how these skills can be applied without having a lot of time for data and analysis.  Critical thinking has broken down in a big way, for a lot of folks.  This isn’t an indictment or endorsement of anyone or any position, but it does give us an opportunity to examine a familiar situation and demonstrate the opportunities that exist for expanding our skills.

Here’s the current situation:

Presidential candidates have made the price of gasoline an election issue.  Cheap gas is good for economic growth and recovery.  America needs a president that will lower the price of gasoline.  Right?

The price of gasoline has reached unprecedented levels; predictions estimate that fuel will cost over $5 a gallon by summer. The negative impacts of high priced gasoline on the economic recovery are vigorously touted. This drama is playing out in all forms of media. President Obama has been cast as the villain and a number of others have put themselves in the role of hero by promising $2 a gallon gasoline. But what is really going on and what is really possible? Are there any heroes and villains?

What are the facts? What do we know or make reasonable assumptions about?

  1. Gasoline was less then $2 per gallon in 2008.
  2. America imports more oil than it produces.
  3. Crude oil is a world commodity.
  4. Crude oil prices are sensitive to political unrest in oil producing regions.

Given this context, let’s apply some rudimentary critical thinking to these points.

1.  What was going on in 2008 that might have influenced the price of oil? There was a worldwide recession, which reduced demand.  Contrast that to now. China and India’s growth has increased and America is recovering.

2.  There is not consensus about how much oil is yet to be discovered, and how much of the untapped reserves might be under America.  That said, it is indisputable that production of whatever oil might be “out there” will take years. It is also indisputable that the “easy” oil has been found and additional finds will be more costly to produce. Therefore at a minimum America is years away from any major shift in oil imports as a result of developing new oil fields.

3.  No matter where the oil comes from America pays the “world” price. American or OPEC produced is the same price. Even if the origin of the crude was government owned it is priced the same. This won’t shift without shifting the entire American oil industry from private to government, which is not likely to happen.

4.  In 2008 there was a reasonable amount of political stability in much of the oil producing parts of the world. Recently the situations Libya, Syria and the Arab Spring have injected a measure of unrest and uncertainty into the region where much of the world’s oil is produced.

How much of this does the President control? Not very much. Demand is both international and phenomenally complex. Unrest and political strife are relatively independent of American influence. A dramatic shift in domestic production would take years and even then might not produce enough oil to influence prices.

This application of critical thinking, even in a somewhat rudimentary fashion, to the current set of issues about the price of gasoline leaves me believing gasoline is not going to get substantially cheaper soon and there is little the President can do to impact oil prices.

In this exercise we have taken a complex issue, applied critical thinking and developed a reasonable, defensible position. Contrast this to the rhetoric of the campaign, or the opinion that pundits are trying to “hand out”. Quite different, especially in terms of where the position or opinion arises.  This position can be used in our decision-making that would be affected by the cost of gasoline, i.e. this summer’s vacation drive, purchase of new car or whether gasoline prices will influence our vote.  This was done without a year’s worth of analysis or detailed statistical work. We used what we knew, what made sense and stepped away from the emotion of the decision.

What can you do to improve your critical thinking ability?

  • Ask why, several times. Bring up that child-like curiosity and ask why, why, why.
  • Step away from the emotion of the issue or the moment. Be dispassionate. Turn on that Dr. Spock like logic.
  • Listen to your intuition, it is telling you something is wrong. Figure out what is wrong and ask why, why, why.
  • Ask your self and your team, “What are we missing?” Assume you are missing something.
  • Write it down. Make a list of what you know, what you think and what you are assuming. Then challenge each item on the list.

Critical thinking is a skill as such it can be learned and like any other skill the more practice the better you get.

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