Chez Chesler

Knowledge Problem: The Fundamentals Are Basically the Same: A Reprise of Last August's High Gas Price Posts Pointed by Jonathan Adler on the Volokh Conspiracy. Professor Kiesling discusses the fundamentals of gasoline prices and concludes that things aren't particularly anti-competitive, but gasoline just isn't that expensive as household expenses go. I regularly get spam about how we consumers are going to bring Big Oil to its knees by refusing to buy gasoline on the second Tuesdays of months that have an 'R' in the name. That doesn't work: not enough people sign on, and even those that do just buy the gas on Monday or Wednesday. Just like free market versus command economy, the best plans ask people to act in their immediate self interest. Consumer demand has been too inelastic based on price, possibly due to laziness, or not thinking, or someone else paying. All we have to do to make the retailers (and thus influence it upstream) lower their prices as much and as quickly as possible, is to be much more elastic. And we don't even have to change our driving habits or give up our big cars. All we have to do is always buy from the cheapest gas station! As you drive around, note the prices of all the stations you pass in your normal course of business. Share the information. Make use of services like the gas price survey on autos.msn.com or www.massachusettsgasprices.com. And do your best to always buy from the station with the lowest price. I've seen stations with a 5 cents per gallon difference located across the street from each other, and folks are still buying at the more expensive station. (In one case, the Exxon station is cheaper than the small-chain, no-brand station!) Even if you're not going in that direction, then buy it there the next time you pass it. (And if you're so low that you're about to run out, that's even more savings from making those two left turns.) We can't force them (the retailers) to sell at a loss, but we can force their profit-maximizing price lower.