I received an e-mail from one of my correspondents recently that helps illustrate just how lacking in critical
thinking and economic knowledge so many Americans are. Who knows how many generations this particular e-mail has
been clogging the Internet, but it irks me how many people have their time wasted by such nonsense. These people
could be inventing a substitute for gasoline, but they’re too busy unclogging their inboxes. So, here are relevant
excerpts from the e-mail before I waste my time mentioning why it is dead wrong.
Subject: GASOLINE PRICES
Join the resistance!!!!
I hear we are going to hit close to $3.00 a gallon by the summer.
Want gasoline prices to come down? We need to take some intelligent, united action.
This makes MUCH MORE SENSE than the “don’t buy gas on a certain day” campaign that was going around last April or
May! The oil companies just laughed at that because they knew we wouldn’t continue to “hurt” ourselves by refusing
to buy gas. It was more of an inconvenience to us than it was a problem for them.
Here’s the idea: For the rest of this year, DON’T purchase ANY gasoline from the two biggest companies (which now
are one), EXXON and MOBIL. If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the
other companies will have to follow suit. But to have an impact, we need to reach literally millions of Exxon and Mobil gas buyers. It’s really simple to
do!!.
If this makes sense to you, please pass this message on. PLEASE HOLD OUT UNTIL THEY LOWER THEIR PRICES TO THE
$1.30 RANGE AND KEEP THEM DOWN. THIS CAN REALLY WORK.
What will this strategy to not buy gas from Exxon/Mobil do? Not much. It might hurt a bunch of small
entrepreneurs who own gas stations. It might hurt the economy even more when they go under. But it won’t change
gas prices.
The price problem is not the oil companies or the gas stations. The problem in gasoline prices comes from four
sources. The major problem is the environmentalists. We have less refineries today than we did ten years ago.
Nobody is investing in new refineries because the environmentalists lobby local governments to ensure that the
refineries are never built. The same has happened to our nuclear energy industry. The dangers of refineries and
nuclear plants have been exaggerated and increased the cost of doing business, especially the cost of building a
new facility with modern technology that is cleaner and cheaper. The oil companies could afford the facility, but
not the cost of jumping through hurdles. So, besides Ralph Nader, the Sierra Club, and all of their friends, what
are the remaining causes of high gas prices?
The next big one is called the Government of the United States of America. There are gas taxes. That is a small
part of the Feds’ take. But most of the costs are more indirect. There are federal regulations requiring
different fuel formulae in different parts of the country. This is for environmental reasons, supposedly. The
regulations do come out of the Environmental Protection Agency (EPA), after all. Thus if a gasoline pipeline
breaks or a refinery goes up in smoke, there is no replacement for that gas from some other part of the country or
some other refinery. Other refineries are making different gas blends. They would have to retool the refinery by
which time the problem would have solved itself at the problem refinery. Thus one part of the country can have a
shortage that drives up the price while the rest of the country feels good that they aren’t affected. This
happened to the Detroit area not long back when a pipeline broke.
The third factor is a bunch of nasty, terrorist-supporting despots and a few good businessmen protecting their
country’s interests. Collectively, they are known as OPEC. They have decided to limit their oil output. That
brings prices up. Most of the oil ministers are part of dictatorial r‚gimes, like Saudi Arabia, Syria, and their
ilk. And let’s not forget Venezuela, the oil-rich South American nation that is having a dictatorship thrust upon
it by the rabble in the streets. Hugo Chavez is contributing more to your oil prices than Exxon/Mobil.
The fourth factor in gas prices is state government. Gas taxes again. Everybody wants his little take off the
top. Mind you, here in Michigan, those taxes go to improve the transportation infrastructure, or so I hear, so
that money saves us paying out more for wheel alignments and pothole damage later. You have to decide whether
these taxes are worthwhile, but they are hidden in your gasoline price.
The fifth factor is the environmentalists again. Yes, I only said four factors, but these idiots deserve a second
mention. They don’t want anyone to actually drill for more oil. Where we could have a passel of development and
high-paying oil jobs in Alaska, and more oil on the market when OPEC cuts output, we instead have...uh...well,
caribou, I guess. When oil prices go up, it should be an incentive for oil companies to explore and develop new
oil fields. That is called the economics of supply and demand. Unfortunately, environmentalist groups (who
usually own SUVs) are standing in the way.
So, if you wish to reduce gasoline prices, here are some steps to advocate and send on to all of your friends:
Get politically active for economic sense in government. When you hear about these environmental activists doing
something stupid politically, square off against them. The free market is a more efficient means for ensuring
environmental quality than government intervention. Just ask the Eastern Europeans or the Chinese about pollution.
Fight for more oil wells. Fight for more refineries.
Do what you can to reduce the size of the government. Fight to eliminate costly regulations and taxes. Fight to
eliminate government programs that are wastes of taxpayer money. The free market is a fairer and more efficient
means of distributing wealth. Independent charities are more efficient than government programs. If you fight
government spending and fight to keep government regulations light and taxes low, everything will cost less, not
just gasoline. Not only that, but your disposable income will go up. This applies to both federal and state
programs. The effects of this are almost all indirect, but very far reaching.
Fight to privatize the roads. Americans built and maintained roads through private means for years. The toll road
is one example that is still extant. The people who use toll roads pay for them. They don’t need gas taxes.
Roads in unincorporated neighborhoods are another example that still exists. The people who live there pay for
their roads. The neighborhood associations bid out the contract for the paving work. It isn’t done with state and
federal gasoline taxes.
Fight for intervention in Venezuela. Hugo Chavez may be elected, but so was Jean-Bertrand Aristide. The
Venezuelan people got a dictator wannabe who thinks Castro is a good example for running a government. Write your
Congressional Representatives and Senators. Ask that pressure, even military pressure be put on Chavez to step
down. Bring back Democracy to Venezuela. That will help your oil and gasoline prices.
Fight for democratic changes in the rest of the Middle East. We are in the process of building a stable,
federalist Iraq with Democratic institutions and free-flowing oil. If there were more r‚gime changes in the Middle
East, the oil shocks would decrease.
I’m sure there are other things you can do, but they all add up to freer markets, more countries with elected AND
accountable governments, and fighting the emotional pleas of the Communists and Socialists who populate the radical
environmentalist movement.
Go forth and conquer!
P. S. Oh, in the interest of full disclosure, I did work for Mobil Oil in the summer of 1985. I painted bridges
and walls, cleaned things, dug pits or cleaned out around whistles, repaired dyke walls, and did all sorts of other
scut work as a summer college student. I got $6.50 an hour that eventually went toward my being able to get a
business degree and become a relatively productive member of society. In studying for that business degree, I
studied economics. It is the study of economics, not having worked for an oil company that influenced this essay
and plea for well-thought out action.
Did the guy who originated the original call-to-arms against Mobil and Exxon give full disclosure? Maybe he works
for BP or Shell? Maybe he owns stock in BP or Shell? I neither work for any oil company, have them as customers,
nor own any oil company stock right now. I just want people not to destroy the economy I live in through
precipitous action based on shallow analysis. Do the right thing. Make sense economically.
F. B. Knight is Curmudgeon-in-Residence at the Attila the Hun School of Management. He can be reached for questions
at
fbk@attilathehunschool.net.
