May 15, 2007
Economics Department
Gas Out Day
Today is Gas Out Day, a day of protest against high gas prices being organized through a grass-roots effort in emails and blogs. Here is a one description I grabbed off of somebody's blog:
On May 15th 2007, all internet users are to not go to a gas station in protest of high gas prices. Gas is now over $3.00 a gallon in most places.
There are 73,000,000+ American members currently on the internet network, and the average car takes about 30 to 50 dollars to fill up.
If all users did not go to the pump on the 15th, it would take $2,292,000,000.00 (that's almost 3 BILLION) out of the oil companies' pockets for just one day, so please do not go to the gas station on May 15th and lets try to put a dent in the Middle Eastern oil industry for at least one day.
I encourage everyone to tell everyone about no buying gasoline on May15th. Maybe this should become a monthly thing, we CAN send a message to the oil companies that we won't stand for high gas prices.
First of all, the math works only if all 73 million people would have filled up today. But not everyone needs to fill up every day. Chances are, most of those 73 million people wouldn't have filled up today anyway. If the average person fills up their gas tak once every 5 days, then only about 14 million people would really be participating in the gas-out. This would cut the $3 billion dollar figure down to about $600 million.
(By the way, that 73 million user figure sounds suspiciously like the figure for total MySpace users which was mentioned in last year's gas-out messages.)
Second, the money doesn't really come "out of the oil companies' pockets." It's true that if we don't spend $600 million on gasoline, the oil companies don't get $600 million in gross revenue. However, they also don't have to produce the 200 million or so gallons of gasoline we would have purchased with that $600 million. So really, they're only out the profit they would have made on the gasoline.
Third, they're probably not even out the profits. Every mile we drive uses some gasoline from our cars' gas tank, and every gallon of gas in that tank has to be purchased from a gas station. So if we don't change the way we drive, we won't change the amount of gas we purchase. We may not buy gas today, but we'll have to buy the same amount of gas someday. All we're doing is creating a blip in the gasoline market.
Fourth, the blip we're creating might not have the effect we're hoping for. It's a simple fact that we have to buy the gas before we can use the gas. So if we don't change our driving habits and we still want to avoid buying gas today, it has to be because we have already bought the gas we are planning to use today.
This means that if I was planning to participate in today's gas-out, then I had to check my gas tank yesterday. If I had enough gas yesterday to make it through today, then I didn't need to buy gas today anyway, so I'm not really participating in the gas-out. But if I didn't have enough gas yesterday to make it through today, then I had to buy gas yesterday in order to avoid having to buy gas today.
Therefore, the only way to participate in the gas-out without changing our driving habits is to fill our tanks a day early. In other words, people participating in the gas-out are giving their money to the oil companies a day earlier than expected. I'm pretty sure that's not the way to send them a message to lower gas prices.
Fifth, I'm no expert on the oil and gas markets, but I don't think the oil companies will feel a thing. My guess is that the day-to-day sales at local gas stations fluctuate quite heavily: A day of unusually good weekend weather can cause a demand surge as people decide to take a trip, while an unexpected storm can keep everyone home. A day of nearby road construction can divert half a station's customers to a competitor. These stations have to have the reserve capacity and supply chain flexibility to handle short-term sags and surges in demand. I'm pretty sure that the entire market shock of gas-out day will be absorbed by local gas stations.
Gas-out day...isn't going to work.
(Pipistrello says the same thing, only not as gently.)
.
Leave a comment