01 April 2012

Pump Gas on April 15th!

Damn.  It is happening again. In this year as in several other recent years, an email is circulating urging people to boycott the mean old oil companies. On one day. Without changing consumption patterns.

I first saw it on Facebook. Many of you may have seen it by now too, or may recall its incarnations in earlier years.

Please don't be suckered into this. It's just another incarnation of the bad old meme that we can solve the world's troubles without, well ... taking any trouble.

If only everyone would just refrain from pumping gas on April 15, we'd tame the oil oligopoly, bring peace to the middle east, and so forth.

Um ... no.  You will accomplish absolutely nothing this day. Look at that notice. It actually encourages you to gas up on the 14th so you won't need to pump on the 15th.

How does that hurt the oil companies???

If you buy gasoline a day earlier than you otherwise would, you've actually done them a favor. They have your money a day earlier, and money has time value. It earns them some interest that extra day!

More generally, the oil companies might worry if you and a lot of other people changed your consumption habits to something that didn't require so much of their product. But that's a more long term and more difficult commitment on your part. It might involve, for instance, moving closer to your place of business.

If your consumption is going to stay the same, then the stream of revenue going to the sellers of the products you consume will be the same, even if you jigger and re-jigger the timing a bit.

"Ah, but they tell us it worked in 1997," you remind me. No, it didn't. What "worked" to bring prices down in 1997 was the oil-for-food program with Iraq. A brief history lesson: after the first Iraq War, during the Presidency of George H.W. Bush, much of the world imposed sanctions upon Iraq in an effort to topple the regime of Saddam Hussein, which that war itself had left standing.

Saddam survived the sanctions, and in 1995, President Bill Clinton, in response to arguments that ordinary citizens in Iraq were being hurt by the continuation of these sanctions, announced a program that would lessen the hardship without, it was hoped, making life any easier for the government. The idea was to allow Iraq to barter sell its oil, but to put the revenues into an escrow account and ensure that they would be available only for foodstuffs and medicines.

Saddam's government signed a Memorandum of Understanding in May 1996 agreeing to participate in their program.

By 1997, then, Iraqi oil was again flowing into world markets. It was this that pushed down the price through that year, not some silly one-day-only boycott.

And, by the way, I challenge any one to show me any evidence from 1997 that any such boycott took place that year at all!  The earliest one I can find any evidence of was two years later. And that had no impact on prices whatsoever.
   
So pump gas, or don't pump gas on April 15th, confident in the expectation that nothing is going to happen that day at the retail outlets across the US or the world that will make any dent on ... anything.

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