Gas Out! Or: How I Learned to Stop Worrying and Love the Gas Companies

Did you buy gas? In case you were unaware, today is an official boycott on gas. Someone on the internet declared it, and it became law. Several times today I was reminded not to buy gas, and an e-mail circulated through the company. I think most of the things I've read have been similar to this, so I reproduce it here for discussion:

Don't pump gas on May 15th!!!

In April 1997, there was a "gas out" conducted nationwide in protest of gas prices. Gasoline prices dropped 30 cents a gallon overnight.

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 [sic] try to put a dent in the Middle Eastern oil industry for at least one day.

Now, being a person with both an economics background and a little thing called common sense, I know that this is completely and utterly pointless. I hate to the be the one to burst the bubbles of the thousands of American youth that think that they have the whole system figured out, but then again, bubble bursting is a specialty of mine, so let's go ahead and get started.

First of all, more people drive than internet users. To be effective, a boycott would need everyone to get together on this. By limiting your rallying cry to internet users (who, perhaps, spend more time at home or the office and thus drive less), you limit the effects of any boycott.

Then, the author goes on to list the number of internet users. Wow, 72 million internet users... now that is an impressive number. That's almost a quarter of the population of the U.S. But, oh wise prophet, you forgot to account for the fact that a large portion of those who use the internet aren't even yet of driving age. And those between 16 and 18 might still get gas money from mommy and daddy, thus not caring about the cost of a tank of gas. I recall that when I was in high school, I got a gas card. When gas first hit $1.50 (oh, those were the days), I didn't care. My parents picked up the tab. My brother now has the same deal. If gas goes up the $5.99 a gallon, he will be relatively unfazed. The world goes on, and we still need to get there.

But, for the sake of argument, let's assume that the 73 million are all driving age adults, who each drive one car, and like to drive a lot. Hell, maybe they all drive silver American sports cars that drink gas like their owners drink gin and tonic on the rocks with a twist of lime. Now we get to some cold hard numbers. First of all, 2.29 billion is not, nor will it ever be, rounded to 3 billion. Bad rounding. Very bad. The author goes on to let us know that if all 73 million of us don't buy gas for one day, we are removing that amount from their pockets. Now, put aside the fact that maybe we don't all need to buy gas today, and thus wouldn't have bought the gas anyways, and thus are not removing cash from oil-covered pockets anyways. By the logic and numbers presented us, we could calculate that $2.292 billion a day would mean an annual income of $837.15 billion (in the logic of the author, that's almost 1 trillion!). $837 billion. Roughly the nominal GDP of Mexico. Very impressive. Especially when you consider the nominal GDP of Saudi Arabia is only $348.6 billion, the UAE is $168.3 billion, Kuwait is $96.1 billion, and Qatar is $52.7 billion (all numbers courtesy of the International Monetary Fund). Even if the entire economy of these four massive oil producing nations were oil based, it still wouldn't add up to that number. And since the boycott is aimed specifically at Middle Eastern oil industry, we should still feel free to buy from any American oil company, right?

But putting aside all the flawed reasoning, bad data, and high hopes discussed thus far, the most obvious defect in this entire scheme is that the vast majority of participants in this "gas out" are playing a zero-sum game; that is, while they may avoid buying gas today, they will inevitably buy gas tomorrow or bought it yesterday. There isn't a loss in the pockets of the gas companies. You're simply giving it to them earlier or later. And the gas companies, fully aware of what is going on, have accounted for this. You know how I can tell? Yesterday, in the 8 hours I was at the office, the price of gas shot up 40 cents a gallon. Today, the prices dropped. Money says prices go up tomorrow. Gas companies, those bastions of free-market economics, know that they can induce people to buy by dropping the price today. Buy it today, and you might actually get a good price (good being a relative term, of course).

How could you hurt the oil companies, oh optimistic youth of America? Don't buy gas for a month. Convince all your friends to carpool in a hybrid. Take over the NYMEX and use basic economics to drop the market-set price of oil to a range you deem reasonable (ah yes, traders set oil prices... always so overlooked). Convince every investor that oil is a bad investment, thus killing the demand, and the price.

Alternatively, you can do what one of my friends did: get a job at an oil company. He doesn't pay for gas, and gets more money when gas prices go up. All you have to do is relocate to Texas and sell your soul! At prices like these, it's a bargain!

Until then, it sucks, but I will keep buying gas, and, like it or not, so will you. In fact, the gas station across the street just dropped their price 15 cents. Excuse me while I get in line behind the elderly gentleman and his wife who clearly didn't get the e-mail. Fill 'er up.

*Pop* goes the bubble.