March 20th, 2008 | 
Author: *Sigh*
Yet another lame chain-email, this time transformed into a Facebook group. The claim? Gas prices can be brought down by inciting a price war!
I think I’ve explained this about 400 times on this blog, but I will keep on explaining because currently the Facebook group has 284,613 members who I haven’t reached yet.
Supply and demand. Where they meet is the equilibrium price:
The only way price changes is if there is a shift in demand or a shift in supply. That is, if demand goes down/up or supply goes down/up. Now, this assumes a well functioning, rational market. The oil market is not such a market (OPEC is a cartel, most countries have taxes, etc), but oil is a fungible commodity, so it’s pretty darn close.
This Facebook group, which has 284,613 members let me remind you, contends that the way to incite a price war that will drive prices down is to simply not buy gas from Exxon and Mobil (the two biggest companies, and thus the most eeeevil). Note that this group doesn’t call for consuming any less gas, but rather buying the same amount of gas from a different station.
So what does this mean? It means the demand curve doesn’t shift. And since this call to action is based on consumer activity, the supply curve doesn’t shift either.
What does this mean? The price will not change.
Even if everyone in the world stopped buying from Exxon and Mobil, all that would do is put Exxon and Mobil out of business. The price of oil would not change, and Johnny Bluecollar would lose his job at the Mobil station.
Want to make the price go down? Here are the three things you can do:
- Use less gas. (Supply curve shifts left)
- Make more gas. (Demand curve shifts right)
- Elect people who will vote to cut the sales tax on gas. (It’s complicated, but equilibrium price would probably go down)
That’s it.
Tags:
4. Usurp the cartel
5. Use alternative fuels, like bio-diesel, hydrogen and homeless people.
Your #5 would be covered by #1: use less gas.
But nobody has come up with a way to use Soilent Green as a fuel for cars.
Soylent Green is my kind of people
i think Soylent Green is a pretty cool guy. eh fuels cars and doesn’t afraid of anything.
By the way, I think #1 should say “demand curve shifts left” and #2 should say “supply curve shifts right”. Hopefully my econ professors aren’t reading.
gas is a rip off when will we get some relief
“There must be some way out of here”, said melisa gill to mgroves, “there’s too much confusion, I can’t get no relief.”
Its nuclear stupid, the N is silent.