People like a little hype to keep their lives interesting. Every week or two there seems to be a new Facebook-wide movement that stirs people to action. People always like to believe that changing their profile picture will be successful in changing public policy or lowering prices or creating jobs or whatever else they want.
I can’t say I know exactly how successful any of these movements are—I tend to think they do far less than people would like to think they do—but one new one seems particularly ridiculous to me.
“Don’t pump gas on April, 15 2012” So the idea is that “all internet users are to not go to a gas station in protest of high gas prices.”
According to this picture flying around the internet, “In April 1997, there was a ‘gas out’ conducted nationwide in protest of gas prices. Gasoline prices dropped 30 cents a gallon overnight.”
So now all internet users are going to get this message and not pump any gas on April 15th in order to put a dent in Middle Eastern gas companies and hopefully drop gas prices overnight.
Ok…a few things…first of all, there’s this nifty little proviso that says “If running low, just get your gas the day before on April 14 or the day after on April 16.”
So…actual net change to the gas companies’ revenue? Probably close to zero.
Secondly, let’s get our economic principles straight. The idea here is that in one day the nation is going to sufficiently reduce demand to bring the price of gasoline down significantly?
Get into the minds of the businessmen for a second…even if everyone did not pump gas for a day, are gas companies going to all of a sudden think that the consumers just vanished?
Of course not. Everyone (including gas companies) knows this is a one-time deal—or at least one time for a long time.
In order to effectively decrease demand for a product, thereby lowering price, there must be a sustainable, long term shift in the behavior of the general population—people must genuinely start using less gas overall.
There must be a real, permanent shift in the demand of the people in order to actually lower prices.
Thirdly, even if the prices of gas were to actually drop (which, again, I doubt they would) they would very quickly rise to the level at which they were before. Why is this?
Because that’s where the natural demand of the product actually lies.
As soon as this one-day-no-gas fiasco is over, people will go back to their regular lives like nothing ever happened.
Gas companies will see that nothing has actually changed, and will bring gas prices right back to normal within practically no time at all.
So if you’re angry about gas prices being too high, what can we actually do? Americans have to actually change their habits.
There has to be a sustainable, permanent shift in how Americans run their lives. People have to make a conscious effort to consume less gas—drive less, carpool, ride a bike, get a hybrid.
Only in this way will suppliers of gas believe that demand for gas has actually decreased.
And only in this way will we witness an actual drop in price. An obviously artificial “decrease” in demand will do absolutely nothing to significantly alter prices—it will only succeed in making people believe that they have done something when really they just wasted their time.
Don’t be naïve, people.
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