With Presidential candidates
talking about a one-day gas-tax holiday and the annual May 15th one-day gas
boycott looming, Boycott Watch decided to analyze both together since they are
related. Repeating our comments in previous reports, one-day boycotts of any
kind simply do not work. The boycotters idea of one-day gas boycotts is to
create a glut of gasoline in the supply lines, claiming the gas companies will,
in the words of the boycotters, choke on an over-supply thus forcing a sudden
and sustained lowering of gas prices. The problem with that theory is that with
one-day boycotts, people will simply buy gas the day before or the day after,
thus the overall supply is not affected, thus such a boycott is meaningless.
On the supply side, gasoline sales remain seasonally
stable on average, and gasoline terminals have large storage tanks which can
easily store excess delivery via pipelines, not to mention that pipeline
delivery and refinery production can be varied based upon any sudden changes in
demand, therefore minor fluctuations in demand are easily adjusted for.
The proposed one-day gas-tax holiday is essentially
the exact opposite of the May 15th gas boycott, and can potentially have a
catastrophic affect. If people plan to fill their gas tanks on the one-day
gas-tax holiday, they will let their tanks run low, thus creating a sudden high
demand on that one day. The problem is that there are only so many gas pumps at
stations, and there are only so many tanker trucks capable of delivering
gasoline from gasoline terminals to individual stations. As such, a one-day run
on gasoline may actually result in long lines at gas stations - while cars are
filling up at every pump, the sudden high demand may result in an insufficient
immediate supply to fill every car.
Within a few
hours, people may end up running out of gas waiting to fill up, causing more
traffic jams, and rumors of not enough gas by mid-day may result in even bigger
runs on gas which will only compound the problem of sudden demand. While there
is a sufficient number if gas delivery tankers available to handle the existing
levels of demand, the same fleet of trucks may not be able to handle a sudden
one-day doubling or even tripling of demand. Essentially, the sudden demand
created can potentially create the gas station equivalent of a run on the banks
- the gas market can essentially collapse while cars are on the road with empty
gas tanks clogging up the roads, highways and parking lots, compounding
problems.
Within hours, gas stations will raise
prices because of the sudden demand, thus reversing any savings due to the tax
holiday - gas prices will rise swiftly and people who are low in gas will
simply have to pay the higher prices because they still have to get home, which
means driving home in super heavy traffic, eliminating any real savings from
the few dollars consumers expected to save per fill-up even if they do buy gas
at the lower gas prices.
The proposed one-day
gas-tax holiday is a recipe for an economic disaster, and will make the U.S.
the butt of international jokes. If banks offered a one-day extra three percent
cash incentive per withdrawal, you can be sure there would be a cash-run on the
banks, causing all kinds of economic uncertainty since banks will surely run
out of cash with such a proposal. The same applies to a one-day gas-tax
holiday. If the Presidential candidates want to give consumers a real break in
gas prices, a better idea would be to let American companies explore for oil in
Alaska, the North East coast and in the Gulf of Mexico. The problem we face is
that world demand has increased and the U.S. has not met its own needs in the
face of it. A one-day gas-tax holiday may sound nice on the campaign trail, but
it does not solve any long term issues, rather it creates new and potentially
devastating economic problems. |
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