Everyone and their brother is bitching about the price of gas these days. I’ve heard a bunch of theories for why gas is as expensive as it is. It’s Obama’s fault for bombing Libya. It’s Obama’s fault for not allowing new US drilling. It’s Obama’s fault for wearing a yellow tie that one time. It’s Congress’s fault for allowing oil companies to have giant tax breaks. It’s Congress’s fault for threatening to take away the oil companies’ giant tax breaks. It’s Congress’s fault for being Congress.
I’ve got news for everyone: gas prices are our fault. For paying them.
The fuel market works off the most basic economic principle of supply and demand. They have gas – supply. We want gas – demand. They meet our demand for gas by selling us their supply of gas. They set their prices based on what they think we’ll pay. If we pay one price, they raise the price to see if we’ll keep paying it. If we do, they raise it again. And again. And again. They’ll raise prices until the day when their sales drop, or rather when their supply starts to exceed our demand.
Now, gas sellers may try and cry scarcity – low supply – to justify raising prices. They’ll say that they only have so much gas and they need to charge a lot for it because when it’s gone, they’re out of business so they need to make profits now. But I haven’t seen anything that indicates that we’re in a scarcity crisis. There is plenty of gas on the market and our import supplies aren’t being affected by the Libyan action as much as some would have you believe. The top foreign oil provider to the US is actually Canada and we’re not bombing them. US oil companies would like to drill more so they can garner bigger market share – can’t let those Canadians profit from our oil demnd, eh – but new drilling tomorrow won’t affect gasoline supplies tomorrow and therefore won’t affect prices. The only thing that will bring prices down tomorrow is a drop in demand for existing supply tomorrow.
I know, I know, I know. You can’t stop gassing up your car. You have to get to work. The kids have to get to soccer. You need to run to the liquor store. You can’t cut back. I know. I’m not going to suggest that you do. Instead, I’m going to suggest you cut back on produce.
Seriously. Go to your fridge. Look at your selection of fruit. Pick up an apple. Where did that apple come from? I’m betting it came from the West Coast. Maybe Washington state? That’s all well and good if you’re reading this from a living room in Walla Walla but if you’re on the East Coast like me, you should take some time to think about how that apple got into your fridge. It rode on a semi for 3,000 miles. 3,000 miles in the largest, heaviest, least fuel efficient kind of vehicle on the road. How many gallons of gas did it take to put that apple in your fridge? I have no idea, but I bet it was a lot. That’s why the apple was so expensive. You had to pay for the cost of shipping and that cost has gone up with gas prices, which the trucking company keeps paying because you keep demanding out-of-season apples from 3,000 miles away. And the oil companies rejoice and roll around in $10 billion worth of net income from the first quarter of 2011. Money they got from gas for the truck that you paid for when you bought that apple.
Don’t eat the apple.
Next week, when you go to the grocery store, don’t buy an apple grown on the other side of the continent. Just don’t. See if you can find fruit that was grown in-state instead. Don’t demand the fruit that requires a truckload of gas to get from the orchard to you. If you don’t demand that apple, the grocery store might order fewer apples next time. And the grower will ship fewer apples*. And the trucking company will make fewer runs of apples. And they’ll use less gas. And the oil companies will see a drop in demand for their product and say “Huh. They’ve stopped buying gas. That’s no good. Maybe if we drop the price by 2 cents a gallon they’ll buy it again.”
But you don’t have to. You can keep buying local fruit and veggies. You can keep buying products produced in your state. You can keep looking for items produced in the US that don’t require oil to ship them from factories overseas to get to you. Don’t give in to a 2 cent drop. Keep lowering demand on gas by lowering demand on shipping. Encourage your friends to do the same. Eventually, the oil companies will get the message that the price of gas is too high and you’re tired of paying for it at the pump and everywhere else you buy products that were shipped. And that’s when prices at the pump will start to drop.
*I am aware that decreasing demand for apples as a tool for decreasing demand for gas will have a negative impact on the apple industry. That’s what economists call a negative externality and it’s part of the law of supply and demand. I have no solution for this. Perhaps Robert Reich or Paul Krugman can help. They’re actual economists. I’m just someone who took an economics class once and can now identify patterns in the market and bloviate about them.
Another great post that makes me stop and think about what you brought up.
Also drive a hybrid, ride a bike or walk.
technically, semi’s run on diesel… which is a more efficient fuel. But it still comes from oil, so your argument can stand. We just leave out the refiners deciding whose demands are more profitable–the shipping companies who want the oil turned into diesel versus the average motorist who wants said oil turned into petrol.
Thanks for some food for thought (sorry for that). I used to feel good about finding produce that wasn’t from Chile, but now that things are warming up around here, I’m going to buy local every chance I get.
Great point. I, However cannot abide by it. In the desert of Las Vegas, only cacti is grown in abundance, and only above certain elevations. Tumbleweeds tastes badly, I am assuming. So I am willing to be the hypocrite and tell everyone else to eat what is grown locally. I will continue to drive by the “Farmer’s Markets” here. WHERE, pray tell, are our farms????
Having disclosed my hypocrisy, I agree! Whenever possible, buy locally!
We are on polar opposites of the political spectrums. (as a further disclaimer) This was a wonderfully written post.
Brilliant post! I’m suggesting it to friends right now! Well done!!!
I can do this about four months out of the year in MinneSNOWTA where it snowed the first two days of May. 🙁 I will start looking at clothing labels though – for Made In the USA – that is an easy fix for us.
Great post. I started having a local farm deliver a box of local produce once a week. It’s a little more expensive than I’m used to paying, but the quality is better, and while not everything is from Washington (where I live) but they deemed local to include Oregon and Idaho as well. Still better than all my produce being shipped from Mexico. Sometimes we miss citrus and tropical fruit, so I’ll go by some at the grocery store, but it’s less than once a month. And since I let them bring whatever they have, we’ve been trying new things. I would never have bought a parsnip in the grocery store, but they are freaking delicious. Thursdays are magical, the produce is waiting for me on my porch, and I open up the box to find this absolutely gorgeous array of apples, carrots, cabbage, rutabagas, yellow and purple fingerling potatoes, radishes, etc. It’s this colorful mix of wonderfulness and I’m helping to support area farmers and helping to reduce how far my food has to travel to get to my table. It’s a win/win. Thanks for the great post. =)
Have you heard about the companies that are testing out using electric trucks? I found that really interesting. Wish I could afford electric. And biking to work sounds great, until I realize that means I’d have to find a job closer to my house.
Anyway, I really appreciate your posts that help me understand these types of things so much better. You have a great way of explaining them so I’ll understand (without making me feel like an idiot). Thanks for that!
As a person from MN, there is a way to get through the winter and still eat locally. You can freeze/can your own food or buy local brands (SnoPac frozen veggies, or Bushel boy tomatoes) of produce. There’s also local meat, eggs, and bread year round!
This is why I buy local produce.
Oh, and local Amish/Mennonite eggs. I’m in Southern MD.
I have always bought as much made in the US product as possible, but it’s difficult to fully buy “locally grown” here because it’s Wyoming and the only thing we can truly grow are cows and the hay/grass that sustains them. We can buy some produce from Colorado because some areas have a gentler climate and my grandma happens to live in an area like that so we buy there and bring it home (or she brings it when she comes) and we freeze/can, etc… We can however buy local meat and dairy products and keep a homesteaded ranch from going under. (If you’re not a Vegetarian or Vegan of course and if you are one of those you’re in the WRONG state unless you leave on the far Western side of it)
A couple of things that irk me:
Factory farms ship thousands of pounds of “product” a day. Most of it comes from tortured animals. So if you can, support a local farmer/rancher and you’ll be killing two birds with one stone (meant entirely metaphorically). Also? If it’s not USA factory farmed meat it’s from another Country and the cycle repeats and even gets worse because there are less regulations and more preservatives to get your meat to you without it being riddled with big nasties you have to cook out by making sure the internal temperature is at 300 degrees Fahrenheit before you safely feed it to your family.
Shipping/Mailing is expensive. The cute card my MIL mails to my kids once a week drives me nuts. First, it ends up getting eaten by the puppy or thrown away with the junk mail the following week because you can only keep so many and the kids have lost interest in about 45 seconds. Second, because some genius decided our economy might become sluggish (although as of yet we’ve been very lucky) they laid off multiple local postal workers and are routing our mail through a town two hours away. Not the State Capitol mind you, just a bigger town. That means that card is driven by a local postal carrier (because she’s too lazy to take it to the post office and puts it in her curb stop mail box) to the local post office and then loaded on to a truck that’s driven two hours away just so it can be sorted by a machine rather than the 6 or 7 people laid off here just last week, and then the stamps are voided and it’s trucked back here to our local post office where a carrier picks it up and trucks it over to my cluster box in the middle of the street. How much gas you suppose that wastes? I hate math so I’m not figuring it, but I bet my son could figure it, just like he can read an e-card or answer the telephone. Also? If you’re shipping a package to someone, fill it to the brim first. Better yet? Send e-gifts because they are not taboo no matter what Emily Post might say, and because your 15 year old niece? She isn’t going to like the earrings you spent 45 minutes picking out anyway, she’d rather have the I-Tunes gift card so she can buy more Gaga. Everyone wins. **Note this doesn’t include military care packages, ship away people!!** I am in a huge battle with my employers over this right now. They send out two of everything we mail and because they are old school it says right on the mailing that it’s coming two different ways. One “First Class Mail” and one “Certified Mail”. Since “Certified Mail” is processed differently it’s sent about 3 days later from each point on its journey to the postal carrier’s truck where it will sit for 3 weeks, it’s a waste of money, time, and is just plain stupid because 99% of the certified crap I send out gets sent back un-claimed so I have to then go to the Post Office and stand in line to sign the stupid computer screens that never work right the first time and require 3 more attempts (because they cut the budget at the Post Office when they laid off half the staff and they’re 1 zillion years old). Awesome. You’ve now wasted my time, my gas, wear and tear on my car (oh and the $.50 1/2 cent the government allows per mile makes me laugh, how can you 1/2 a cent? You can’t unless you’re selling gas), and pissed off all of your homeowners when they see the amount of money you spend on Certified Mailings for bills that are 6 months late and are never gonna be paid anyway until I drive back to town and file a lien on the property.
I could go on, but I won’t. Awesome post, even if my husband does work in the oil field (the US oil field though) ;o) My 11 year old learned supply and demand in school a year or so ago. I am completely baffled by how it doesn’t make sense to the adult population.
Wow, sorry that was so long and rantish!! It’s only because I had to go to the Post Office today AND fill my car with gas!
Great post! I’ve been talking about similar things with friends who complain about the price of gas (or even unempolyment).
Also, why aren’t we making cars more fuel efficient? Look at the price of gas in Europe. When they decided to let the price increase, they turned around and created better public transit and required better fuel economy out of cars. It’s ridiculous to see the cars we drive and then we complain about the cost of gas. When we bought our last car a few years ago, I wanted a hybrid made by and American car manufacturer assembled in America (not an easy task, let me tell you). Anyway, they wouldn’t budge on the ridiculous price that they wanted to charge. So I ended up buying a non-hybrid car (more fuel efficent than our previous car) from an American car manufacturer assembled in my home state (in fact only a 1.5 hr drive from my house).
Choices people, we have choices but not everyone sees that.
There are valid reasons to eat local – such as taste and supporting local producer – but it doesn’t affect the environment one way or another. The transportation cost and share of energy is pretty small. See http://www.huffingtonpost.com/2011/05/20/eating-local-does-it-matter_n_864809.html
The big benefit would come from shifting away from red meat and dairy consumption, especially to vegetarian foods.