I was thrilled to receive an e-mail last week about the
Great American Gas Out. It gave me a chance to employ
a decade of otherwise useless experience. For 11 years,
I traded oil for a living. The work left me ill-equipped
for much of anything else, except understanding how the
oil market functions--and what a silly idea this protest
is.
The e-mail message announced that April 30 had been
designated the Great American Gas Out. Organizers of
the event are beseeching drivers across the country
not to buy any gasoline that day.
"It's time we did something about the high price of
gasoline in America!" the message reads. "Aren't we
all sick and tired of high fuel prices? Know what I
found out? If there were just one day when no one purchased
any gasoline, prices would drop drastically."
I don't dispute that multinational oil companies are
tempting targets. Unfortunately, the premise behind
the "gas out," regardless of its good intentions, is
moronic. Here are four reasons why:
1. It's based on a faulty assumption. "Outrageous"
U.S. gas prices remain among the lowest in the world.
Only major oil-producing countries, whose governments
subsidize prices, offer cheaper gas. Prices in some
western European and Asian countries are two to three
times higher than ours. Except during times of unrest
in the Middle East, U.S. gasoline prices have remained
stagnant to relatively low for two decades. Meanwhile,
the prices of real estate and such essentials as beer,
Coke and movie tickets have soared.
2. It won't work. If nobody in the country
drove on April 30, that might get oil companies'
attention. Even then, maybe not. It would slice about
336 million barrels from demand--a big number but not
enough to move prices much. In any case, gas-out organizers
aren't asking for that. They merely encourage people
to top off their tanks before April 30 or wait to fill
up May 1, which means the protest should have zero effect
on total demand.
3. It's naive. Gas-out organizers say
"the so-called oil cartel [OPEC] has decided to slow
production by some 2 million barrels per day to drive
up fuel prices. If we could convince large numbers of
Americans not to buy any gasoline...maybe it would make
a difference in the cartel attitude." Duh! OPEC is not
a "so-called cartel." It's a real cartel and a stunningly
ineffective one most of the time. Oil prices today are
a little more than half what they were in the mid-'80s.
Still, the whole reason OPEC exists is to raise oil
prices (and to keep luxury hotels in Vienna and Geneva
afloat). The organization will hardly be swayed by a
gas out, no matter how many people take part.
4. It's counterproductive. The e-mail
I received omitted a bizarre plank of the gas-out strategy
revealed on the event's official Web site (www.gasout.com).
"Tired of worsening gridlock?" it reads. "Demand a
better quality of life--better access to affordable
and accessible alternative forms of transportation.
Show the world that we are serious." The underlying
theory is that by not buying gas on April 30 consumers
will send a message to profiteering oil companies. ("Oil
companies--give them a piece of your mind" is the header
to a list of oil-company home pages.) But if boycotting
gas stations accomplished anything, it would be to push
prices down.
Low prices, in turn, encourage demand, which is one
of the reasons the United States, with less than 5 percent
of the world's population, consumes about 25 percent
of the world's oil.
The only serious attempts at weaning the U.S. from
its gasoline habit came in the wake of the OPEC embargoes
of the 1970s, when skyrocketing prices forced a re-examination
of our national energy policy. When was the last time
anybody mentioned solar-powered cars? If gas-out organizers
were truly interested in the development of alternative
energy and transportation sources, they'd tell people
to buy more gasoline and drive prices up, not down.
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Willamette Week | originally
published April 28,
1999
