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The Great American 'Gas Out'

In the last few days, I have received several copies of a message
that has been multiplying in cyberspace. Fortunately, it’s not as
pervasive as the “Melissa” virus of a few weeks ago.

Blaming the high price of gasoline on the greedy oil cartel, a
misguided e-mailer hoped to start a one-day, nationwide boycott,
figuring that it would drive prices down.

“Let’s have a GAS OUT!” he wrote. “Do not buy any gasoline on APRIL
30, 1999!!!!!”

He went on to urge recipients to pass his message on to “everyone you

I wonder if these e-mailers know that the retail price of gasoline in
this country is among the lowest in the world (Mexico, the Arab
Emirates, and a few other countries have lower gasoline prices).

Any price comparison among countries requires a common denominator ? a basis. Let’s compare our gasoline prices with those in Germany.

It’s easy enough to convert Marks per liter to Dollars per gallon,
but that doesn’t tell the whole story. The real question is: “How long
does a consumer have to work to pay for a specific quantity of the

In this country, a $12/hour wage earner works about 7 minutes to
pay for a gallon of gasoline at $1.50/gallon. A typical German worker
pays the equivalent of $4.35 (at the current exchange rate), which takes
him about 26 minutes to earn. Our German friend pays about 2.9 times as
much (in currency), or about 3.5 times as much (in labor).

Not mentioned in the e-mail was the question of taxes. There’s a wide
disparity in the gasoline tax among our 50 states. When combined with
the federal tax of 18.4 cents per gallon, the total tax ranges from a
low of 25.9 cents in Georgia to a high of 54.4 cents in Connecticut.

If EVERY driver in the country participated, what effect would a
one-day “boycott” have on prices? Some retailers might quickly get bored
with their “slow day,” raise their prices by 10 cents a gallon, and wait
a few days for the customers to return with a nearly empty tank.

A one-day gasoline boycott might be a good topic for the radio talk
shows, and perhaps even a welcome relief from some of the other national
and world news, but it’s doubtful that two percent of the motoring
public in this country would participate.

Remember the big public uproar after the Exxon Valdez oil spill
disaster? Americans demanded that our “government” punish Exxon with
multi-million dollar fines. The “ecology people” testified before a
Senate committee. They demanded huge fines, as “punitive damage”
(revenge) against the “bad” oil company. What happened? Every penny of
Exxon’s enormous cleanup and “revenge” expense reduced their net profit,
effectively reducing their tax liability to the government. Who paid
THAT bill? Other taxpayers, of course.

The company’s expenses also triggered an increase in their prices.
This had a tendency to raise the retail prices of ALL oil companies.

The day after Exxon’s disaster, a Pennsylvania retailer for another
brand of gasoline raised his prices by four cents. When asked why, he
cited the Exxon mess in Alaska, and explained, “Well, they sure as hell
are going to raise THEIR prices, so I am competing with them.”

Our free, competitive economy has a way of stabilizing the price of
all commodities. Who paid for that price increase? The same taxpayers
(also known as consumers).

Our only “weapon” against higher fuel prices is a long-term reduction
in consumption ? and NOBODY in this country is willing to go back to
underpowered, uncomfortable, low capacity cars (or bicycles). The big
trend to bigger and “thirstier” Sport Utility Vehicles in this country
is a clear indication of what the motoring public wants.

A one-day (or one-week) boycott won’t do it.