Chain Letter Nonsense


I just received an email chain letter that seeks to stir up a gasoline boycott.

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IT HAS BEEN CALCULATED THAT IF EVERYONE IN THE UNITED STATES DID NOT PURCHASE A DROP OF GASOLINE FOR ONE DAY AND ALL AT THE SAME TIME, THE OIL COMPANIES WOULD CHOKE ON THEIR STOCKPILES.

AT THE SAME TIME IT WOULD HIT THE ENTIRE INDUSTRY WITH A NET LOSS OF OVER 4.6 BILLION DOLLARS WHICH AFFECTS THE BOTTOM LINES OF THE OIL COMPANIES.

THEREFORE MAY 19TH HAS BEEN FORMALLY DECLARED "STICK IT UP THEIR behind " DAY AND THE PEOPLE OF THIS NATION SHOULD NOT BUY A SINGLE DROP OF GASOLINE THAT DAY.

THE ONLY WAY THIS CAN BE DONE IS IF YOU FORWARD THIS E-MAIL TO AS MANY PEOPLE AS YOU CAN AND AS QUICKLY AS YOU CAN TO GET THE WORD OUT.

WAITING ON THIS ADMIINSTRATION TO STEP IN AND CONTROL THE PRICES IS NOT GOING TO HAPPEN. WHAT HAPPENED TO THE REDUCTION AND CONTROL IN PRICES THAT THE ARAB NATIONS PROMISED TWO WEEKS AGO?

REMEMBER ONE THING, NOT ONLY IS THE PRICE OF GASOLINE GOING UP BUT AT THE SAME TIME AIRLINES ARE FORCED TO RAISE THEIR PRICES, TRUCKING COMPANIES ARE FORCED TO RAISE THEIR PRICES WHICH EFFECTS PRICES ON EVERYTHING THAT IS SHIPPED. THINGS LIKE FOOD, CLOTHING, BUILDING MATERIALS, MEDICAL SUPPLIES ETC. WHO PAYS IN THE END? WE DO!

WE CAN MAKE A DIFFERENCE. IF THEY DON'T GET THE MESSAGE AFTER ONE DAY, WE WILL DO IT AGAIN AND AGAIN.

SO DO YOUR PART AND SPREAD THE WORD. FORWARD THIS EMAIL TO EVERYONE YOU KNOW. MARK YOUR CALENDARS AND MAKE MAY 19TH A DAY THAT THE CITIZENS OF THE UNITED STATES SAY "ENOUGH IS ENOUGH"

What I'd like to know is: why just a single day of outrage? Certainly, if gasoline is not worth $2+ per gallon, why should we EVER buy it? If it's only worth $1.50, we should have stopped months ago. What's happening? Could it be that, to a lot of people, gasoline is actually worth MORE than we're paying? Perhaps even if the price went to $4 per gallon, there would still be plenty of people willing to buy it (witness Europe).

Doesn't that imply that all along these evil oil companies have actually been GIVING us something for $1.50, for which we're willing to pay much more? Haven't they actually been GENEROUS all along, and haven't WE actually been GREEDY? If I truly value gas at around $4/gallon, haven't I been profiting roughly $2.50/gallon for the longest time? Haven't you?

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WAITING ON THIS

WAITING ON THIS ADMIINSTRATION TO STEP IN AND CONTROL THE PRICES IS NOT GOING TO HAPPEN.

Exhibit# 25,293 of the glaring lack of decent economic education in the world today. Price controls? Egads. I don't like fuel lines, thankyouverymuch.

There is one way the

There is one way the government can provide a "price control" cut the taxes on gasoline.

hahahahha that is so true,

hahahahha that is so true, and funny.

I got this one a few years

I got this one a few years ago, passed on by my sister, and as a result of my "reply to all" rebuttal got into an extended (but not nasty) debate with one of my sister's friends, whom I have never met. I stopped when my sister asked me to knock it off, but I think I brought him around at least a little.

I got it from an older

I got it from an older cousin. In some ways it's sad.

In the long run, though, the

In the long run, though, the only way a producer can charge you according to the value you place on the product is if he's in a monopoly position. The effect of competition is to reduce price to the cost of production.

The first glass of water may be "worth" an infinite amount to a man dying of thirst, and the twentieth glass may be worth nothing at all to him. But unless the water seller is in a privileged position, the price of the first and last glass will reflect production cost, and not value to the buyer.

The Austrian doctrine that "utility" determines price is true only if you take that statement in a very idiosyncratic sense: price is determined by utility *given* existing stocks. Utility determines price only given a snapshot of supply and demand at any given moment.

So the question remains: does the gasoline industry receive a producer surplus or quasi-rent because of government intervention? If so, a boycott might not be so absurd after all.

people won't hold off on gas

people won't hold off on gas completely because it has inelastic demand, correct?

Scott, Agreed for the most

Scott,
Agreed for the most part, though, it has it's limits.

KC,
Yeah, the gas guys do have it good. As Harry Browne says, we don't actually know how much gas costs, because of government intervention in the Middle East.

Do the Autrians say that utility determines price, or value? (I'm asking.)

Good response to the chain

Good response to the chain letter in a Detroit Free Press column this morning:

http://www.freep.com/news/driving/helms18_20040518.htm