How to lower gasoline costs with a boycott
James Joyner writes about the folly of the latest gasoline boycott scheme. We’ve all seen the one where we’re supposed to avoid buying gas on a particular day (which won’t work because we’ll buy just as much gas the day before or the day after). This one, we’re not supposed to buy from a specific retailer ever until they lower their prices. As Joyner observes, this won’t work, either, because gasoline is a commodity and no matter which company you buy it from you’re still bidding up the price of a limited resource.
But there is a way to lower what you pay for gas: permenantly lower your gasoline consumption, a personal true boycott. Get a more fuel-efficient car. Carpool. Use mass transit more. Bike or walk when practical. If everyone uses less gas, then all else being equal prices will go down. But even if only you use less gas, then you may still be able to spend less on gas despite the unit price continuing to rise.
The alternatives to your current gasoline use are not costless, of course. Carpooling, mass transit, and human-powered transit aren’t as fast or convenient as driving your own car. A more fuel efficent car may be more expensive than your current car, or it may not be as good a car in other respects. It may be that you’re better off doing what you’re doing now, even at higher gas prices. In that case, by all means continue your current gas-consumption habits, and you are certainly entitled to grumble about costs going up, but remember that the reason you are paying the higher prices is because gas is worth at least that much to you.
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16 comments
It’s getting out of control. Gas is almost costing as much as a bottle of water, or a gatorade, or a Starbucks Latte!!!
A gallon of gas cost $1.25 in 1980. Adjusted for inflation that comes out to $3.24 in 2008.
And then there’s the concequence of a falling dollar…
What the frak is everyone bitching about?
People are bitching because the inflation-adjusted prices were much lower during the late 80s and the 90s than they were in 1980, and now they’ve bounced back. People are also bitching because we’re not as used to discounting for inflation as we ought to be.
There has been a big jump in nominal gas prices over the last few years, and it’s cutting into our consumer surplus. My advice to people boils down to lowering your consumption if marginal cost exceeds your marginal benefits, and enjoying what’s left of your consumer surplus if it doesn’t.
So, essentially, people are bitching about their free ride ending.
Got it.
That’s pretty much it. Granted, it’s no fun when a free ride ends, especially if you had no idea it was a free ride or that it was about to end, but all you really can do is adjust and move on.
This is why I bought a Chevy Aveo. It was pretty obvious gas prices were going back to fairly high levels and were likely to stay there for a while.
Even the world’s wealthiest socialist, George Soros, recognizes a commidities bubble. I’m not sure how much actual use of oil is fueling demand, so cutting consumption may not make much difference in the short term. In the long term all bubbles burst, and when they do they usually overshoot - meaning that prices will eventually fall and lag increased consumption.
There is an interesting argument to be had about bubbles, which is that many or even most of them are not really illusions so much as premature. The classic example is, in fact, the dot-com “bubble” of the 1990s. Because yes, a ton of people lost a ton of money on that. But, look at where we are in 2008. The internet is coming of age, and everyone’s on line, and online retailing is absolutely enormous, and companies like Amazon and eBay are more than mainstream, they’re major players in the market.
I’ve often thought the same was true of the Personal Computer. You know, a lot of people made large personal fortunes on that revolution, but having been there to witness it all, it looks to me like a lot, lot more people never got rich, or more than moderately successful, and some went bust spectacularly. No one knows names like Adam Osborne or Jack Tramiel anymore. Yet no one can deny that on the whole that revolution was successful.
Unless the abiogenesis theory of oil turns out to be right after all, we will run out of oil eventually. There’s a lot of uncertaintly over when the cheap oil will run out and over how expensive the expensive oil will be. It’s quite possible the futures market is betting too high, in which case the price of oil will go down once reality sets in, but if we really are close to peak oil (or at least to the peak of traditional cheap oil sources), then the market is doing exactly the right thing by bidding up prices now.
Whether we’re in a bubble or not, conservation will cut demand and lead to a decrease in prices. If we’re not in a bubble, the mechanism is obvious. And if we are, then a surplus of oil will accumulate in the hands of speculators who know they’ll have to get rid of it eventually, accellerating the process of the bubble bursting.
That’s the funny thing isn’t it? If you believe we need alternative energy sources to petroleum, the #1 thing that will help that will be having the price of oil skyrocket, because that will make alternatives more competitive.
Goodness knows, however, that convincing the average person that they can have alternative fuel only at the cost of paying more at the pump is pretty tough. It’s an example, one of many, where people say they’re for something until they have to face the reality behind it. Which is why surveys of what people say they want are only of limited value. Why yes, I want absolutely free and abundant energy, but if you tell me I can have it by squishing babies’ heads with a winepress, maybe I don’t actually want that…
True, that. It’s a very common theme among high-profile issues. I think Milton Friedman compared it to a hypothetical person saying “I want a cat instead of a dog, but I want my cat to bark”.
“Carpooling, mass transit, and human-powered transit aren’t as fast or convenient as driving your own car.”
Depends where you live. In areas with good transit systems (Like SF– where I live, and DC– where I lived for a bit of last year), driving can be the less convenient, slower option.
Let me tell you how much more I enjoy my commute to work now that I can use that time to read…
Yup - about the only tax increase I support is a fairly big gas-price tax hike, ie something like $1>gal or more. I’d offset it by a front-loaded payroll tax reduction.
Frankly, I’d much rather see this done than some silly CO2 cap&trade corporate welfare scheme. (Not that I’m into AGW, but reducing oil imports is a good thing by itself, and much of the dollar weakness is due to us buying oil.)
Gas needs to stay expensive, and over time - it’ll take decades - habits and infrastructure will change.
Voluntary conservation is a nice thing, but it won’t do much for very long. China and India are consuming far more and growing in consumption far more rapidly than we can conserve.
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I predict we will never run out of oil. Can anyone name one natural resource that we have ever used up?
As supply dwindles, prices will go up making alternative options more attractive.
Julian Simon argued that the most renewable resource of all is human creativity. In fact, no resources are “natural.” I don’t think American Indians found petroleum useful, probably the dark, thick, smelly stuff that bubbled up in watering holes was more of a nuisance. Petroleum did not become a resource until it was combined with human creativity and used to satisfy our needs and desires.
So, as oil continues to go up in price, so does the financial incentive to put human ingenuity to work and come up with an efficient alternative.
Am I overly optimistic?
Yeah, resources do become too scarce for their primary purposes and we find either a better way of getting it or we find a workable substitutes, and there are plenty of potential substitutes for oil if the price stays up (fission, solar, coal, etc).
In the very long run, there’s the heat death of the universe to worry about, but that’s mind-bogglingly far away.
Ethanol is functionally a loser as an alternative energy source— if we make it from corn. The other day my mother mentioned that you can make ethanol from cellulose. For example, you could make ethanol from kudzu.
I can see that one.
(Incidentally, when we got our car two years ago I mentioned that one of my requirements was a decent mileage, so we have a six-seat crossover that gets at least 23 miles to the gallon. I don’t see why people have accepted less than 20 mpg… that just seems silly to me.)
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