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Monday, April 30, 2007

Gas Hoax

A friend of mine has posted the following urban myth on his myspace blog:

"NO GAS...On May 15th 2007

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 g
allon in most

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.

If you agree (which I cant see why you wouldn't) re-post this as ''Don't pump gas on May 15th""

I responded in an effort to educate the simple economics of the situation.

1. Even if this were possible (which it isn't, see point 2) this would only affect demand (false demand) in a temporary fashion. People still need to buy gas - so while gas consumption could thoretically be reduced and prices follow suit in the span of a
day, the NEXT day or the week would see an increase in demand to compesate for the short-term "loss" of gas - which would serve to increase prices until equilibrium was re-established.

2. Such schemes are obvious hoaxes when one thinks of the game theory behind it. For this to work, mass coordination on a grand scale would have to occur.
Let's say it did initially - then you'd see a price drop - which would just act as an incentive for drivers to increase their consumption back to normal levels - instantaneously killing any effect of the gas-out. In essence, the incentive to "cheat" the gas-out would be too great such that people would very quickly 'wake up' and get back on the reality-based demand curve.
(the pic is blurry until you click on it)


Drew said...

You're spot-on Garth. I've also posted a few of the fallacies with the don't-pump-gas email on my blog here:
Don't pump gas on May 15th? O'RLY?!?

Anonymous said...

Agreed. However, what would supply and demand say to a month long "protest" whereby consumers only put in a half tank at a time?

The laws of supply and demand suggest that demand would drop, increasing supply, thereby lowering prices at the pumps.

Anonymous said...

To the previous poster:
Half tank won't make a difference. You'll just end up going to the gas station twice as often(and burn more gas as a result). Why? Because you can't drive withoug gas ;o))) So every time you tank is almost empty you'll have to go to the gas station.

If you could manage not to buy gas at all for the month (i.e. use public transportation) that might make a difference.

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