Chain emails and gas prices
Personally, I’ve not gotten the chain email that’s going around, but it seems to be quite widespread. I was reading the Freakonomics blog (an excellent read, by the way), and I came across the rebuttal of the chain email stating that if we all didn’t buy gas for a day, we’d ruin the oil cartel.
I remember reading a similar email years ago, and for some reason, I always wondered idly if it were true. Not having thought about it much, I sort of forgot about it. But with all the insanity in the US surrounding the rising gas prices, it has resurfaced, more popular than ever. Officially, today was to be the day that no one bought gas. I’m sure that this didn’t happen for myriad reasons, the main one being that despite the size and saturation of Internet access in American households, the Internet is still fairly new, and newspapers and television still reach a wider audience. Even massive websites, like Slashdot, only reach an average of ~2000 people per million, or 0.2% of the population. So even if a place like Slashdot had posted it, it still wouldn’t have made that big of an impact. Of course part of the slashdot effect is that many other, smaller websites pick up whatever is posted, further disseminating it to the masses. Supposing that doubled the number of viewers, that would still only be 0.4% of the population.
I think you can see where I’m going with this. Chain emails are futile for getting anything changed, and so is posting on websites that have niche audiences… even those sites that would be considered huge in absolute number of visitors. It is virtually impossible to reach the majority of the American public because they all have different interests and tune into different things.
Alas, I’m rambling. Back to gas prices and bringing down the oil cartel. If you read the post on Freakonomics, Levitt systematically disassembles the email piece by piece, calling into question the figures bandied about, among other things. I largely agree with him, except with one minor nitpick.
If nobody buys gas today, but everybody drives the same amount, then it just means that we either had to buy more gas in anticipation of not buying any on September 1, or that we will buy more a few days later. So even if you believed this would take a $4.6 billion dollar bite out of the oil companies that day, consumers would hand it right back over. If this was “No Starbucks coffee day” it might have some chance of mattering, because people buy and drink Starbucks coffee the same day, so a foregone cup of coffee today may never be consumed. But this is not true of gasoline, especially if no one is being asked to reduce gas consumption. All you will get is longer lines at the pump the day after.
Even supposing the impossible were to happen — everyone opting to not buy gas on September 1 — I don’t necessarily think that the days before and following the chosen date would necessarily completely make up for people not buying gas on that day because people will associated not buying gas with not driving, despite assertions to the contrary. That’s my only minor nitpick, and I would go so far as to extend Levitt’s paragraph quoted above a little bit further. For simplicity’s sake, assuming that roughly the same amount of gas is sold every single day, seven days a week, only 1/7th of the gas-buying population would have filled up today anyway. So at most that would have been a 14% impact to the bottom line for the week. In the big scheme of things, this little blip on the radar isn’t a whole lot when the year as taken as an aggregate, further illuminating how silly the idea of bringing down the oil cartel by not buying gas for a day truly is. Of course, everyone knows that the real solution to the gas problem is greater efficiency, driving less, and finding alternative fuel sources.
Why are gas prices rising, then? That’s the question I’d like to see answered. I have a few thoughts on why, but I know I don’t have the whole story. Nonetheless, I’ll share my thoughts with you.
With Hurricane Katrina tearing NoLa to shreds (donate!), I’ve been watching the news more than I normally do, and the hurricane coverage is typically followed by the next biggest story: soaring gas prices. Indeed, prices jumped about a quarter literally overnight here in New England. Interviewed on the news are lots of understandably angry residents. Some of the comments are… interesting to say the least. One man complained that the president and the government should do something. Another person complained that the government should lower the prices, as if they somehow magically controlled the pricing. I felt a great deal of dismay after watching these interviews, because it was depressing to see how ignorant a large section of the population really is. (As a side note, they also interviewed a Canadian, and he had the most balanced view of anyone they interviewed, noting that we Americans actually have it pretty good. Does that say something about most Americans, or was he just an astute Canadian? That question I leave for you to ponder.)
With respect to the government, about the only thing they can do is decrease its oil reserve to temporarily increase the domestic oil supply. Naturally, the laws of supply and demand determine the prices of nearly everything, and increasing the available stock will decrease the price at the pump. Now, just about everyone knows that OPEC controls the majority of the world’s oil supply, and that they have been known to artificially decrease the supply (by pumping less oil) to increase the price of a barrel of crude. This time, though, they probably aren’t doing this. Instead, it seems as though China might be to blame. As China modernizes, their demand for oil increases, and it seems as though OPEC might be having a hard time keeping up with the demands of both the East and the West. As a result, prices are rising because this time, the scarcity is real, leading to an increase in price at the pump.
I know that this is only one piece to a very complicated puzzle, but I think that it is something that citizens should bear in mind the next time they start to complain about the price of gas (or anything else): it’s about supply and demand — artificial or real is irrelevent because the net result is the same. Without getting into very complex shades of political gray — Halliburton, the war in Iraq, taxes on oil — the government does not control everything, and as such, they should not be held responsible for every little problem that causes Americans as a collective, to gripe. There’s nearly always another side to story, and the mainstream media should do their best to educate rather than sensationalize. (Yes I crack myself up sometimes.)
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[...] A few weeks ago I wrote about gasoline prices in the US, sharing one of the ideas about why they’re going up: China. Business Week has an article today about gas prices, and why the American public shouldn’t blame OPEC. They should blame the US refineries who cannot refine the crude available, because they’re not set up for it. In fact, the crude reserves in the US are higher than they have been in the past, while reserves of gasoline are somewhat lean, hence the higher-than-normal gas prices of late. Fact is, OPEC is willing to sell whatever its customers want. And those customers are turning up their noses at the 2 million barrels per day or so of heavy crude — most of it in Saudi Arabia — that OPEC is not pumping now. [...]
Pingback by polyscience.org » The problem of heavy crude — September 20, 2005 @ 8:49 am
Some chain emails mentioned there, I see. Yeah, I’ve received some of those chain letters. Usually the best idea is to ignore them. Sometimes the prolific ones get reported to Snopes or other such sites, so that people may be made aware of them.
Comment by I rather despise chain emails. — July 5, 2006 @ 1:05 am