Thursday, September 08, 2005

another stupid "gas out" idea

Remember the stupidity behind the Gas Out six years ago? The idea at the time, when gas was probably temporarily around $1.20 a gallon, was that if everyone went one whole day without buying gas, it would force the oil companies to drastically lower their prices. There was no actual change in people's gasoline consumption or driving habits, mind you. There was just one day when everyone was supposed to avoid buying gas, and either fill up the day before or the day after.

Well, I guess it's still easier to blame Big Oil for gas prices rather than making changes in our driving habits. A friend of mine named David McCandless, who found the idea about as ridiculous as I do, forwarded me the latest Gas Out idea. What's appalling about this is that it almost contains a modicum of understanding about market forces, but not enough to actually create an intelligent plan.

The new Gas Out involves boycotting ExxonMobil, which may or may not be a bad idea, but certainly would be useless for driving down the cost of gas. True, ExxonMobil is the biggest of Big Oil, and a major boycott might drive down the price of a gallon of gas at the local Exxon and Mobil stations, because the decreased demand (for those brands) will force them to lower their prices in order to remain competitive with other brands.

Unfortunately, the decreased demand at ExxonMobil would lead to an increased demand for other brands of gas, whether they be Lukoil, Sunoco, Amoco, Chevron or Sheetz, and therefore theoretically would drive up their costs slightly. At best, ExxonMobil prices would drop a few pennies, everyone else's would go up a few pennies, then people would switch back to ExxonMobil because of the lower prices there, thereby leveling out the artifically increased demand at the other stations.

Since the overall appetite for oil would remain the same, I think we could expect the price of gasoline to remain fairly steady.

Is this what's passing for logic these days? No wonder America's falling so far behind the other nations in terms of academic achievement, and losing its edge in the sciences. This is really stupid. Whoever came up with it definitely has a rudimentary understanding of supply and demand, and how they affect economics. Unfortunately, he's not applying the rule properly. To lower gasoline prices, we need to use a lot less of it, period. Not just buy less of it from ExxonMobil, but buy and burn less of it overall.
I read that for hybrids to meaningfully affect gas consumption (demand), 20 percent of our cars need to be hybrids. Right now we're closer to 2 percent. The high price of gas is forcing people to eschew gas-guzzling vehicles in favor of hybrids, but we have a long way to go before we're at the one-in-five mark. Maybe more people should just actually ride their bikes to work, even if it means a longer commute.

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