Back when gas prices were really high here in the US, people like Bill O’Reilly advocated not buying gas on Fridays as a way to get prices to come back down.
Everybody here said it was stupid because people would make up the difference by buying more gas on another day.
So I’ve been wondering this for a while now, and I’ve finally decided to ask, what would have happened if a large number of people would have stopped buying gas on Fridays AND not put more in on other days to make up the difference?
I’m not agreeing with Bill O’s plan, I’m just curious what the results would have been if it had been carried out.
Well, assuming gas purchases were randomly distributed, it would be exactly equivalent to reducing gasoline consumption by 1/7th, or by 14%. Reduced demand, same supply, means a drop in prices. Oh, but now we have a drop in price. And with lower prices, that inevitably means an increase in demand.
If you decrease overall consumption, then other things equal the price will go down. That’s Econ 101 stuff. And in fact, that’s exactly why prices did go down. Global consumption dropped due to the financial meltdown.
What was being suggested wasn’t lowering consumption, though - O’Reilly didn’t call for people to drive less, just to change which day they bought gas on. I believe my response at the time was something like:
[montgomery burns]Excellent! Smithers, fire the Friday staff.[/montgomery burns]
Well, all that would mean (besides the weird day on which to never buy gas) is that people are finding ways to reduce their gas consumption. That could be achieved by driving less, using more fuel-efficient techniques in their driving, or driving a more fuel-efficient car. So if the usual supply and demand follows, then gas prices would eventually drop, I would think.
Really, the same result would have been achieved if drivers had just been encouraged to use less gas. Plenty of people were encouraging just that, too.
Yup…just delaying your purchase by a day, but not buying any less gas in the long run, wouldn’t have an impact on prices.
Even if you got an awful lot of people doing this, what you’d probably wind up with is gasoline sales dropping by X million gallons on Friday, but then Saturday’s sales would be increased by roughly X million gallons over normal (as people bought the same amount of gas on Saturday that they would have on Friday). Net effect: negligible.