This angle actually could have some validity. Back during the gasoline
crisis of the 70's, related to the Arab oil embargo, I heard it
claimed that one of the factors that caused the shortage was public
hysteria. Instead of the average car running around with a half a tank
of gas, people suddenly tried to keep their tanks near full. This
caused a surge in demand, which made the shortage far worse.
I can see where someone speculating in gasoline futures would like to
encourage people to increase the amount of gas they are buying in the
short run to keep the demand up long enough so that they can get out
with a big fat profit. However, if you are following this strategy,
you need to get out before people revert to old habits...
On Mon, 02 Jun 2008 09:14:43 -0400, C. E. White wrote:
I had a friend who would run his tank near empty all the time. He would
stop and put in $2 every so often just to keep the car running.
I always kept my tank near full all the time (still do).
I stop and put in (now, $6) every so often.
What's the difference?
(HINT: What happens when either one of us runs out of money?)
If you're stopping daily to get a couple of gallons vs. once a week to
fill up, then I bet that you are using more fuel (and money) stopping/
starting the engine and putting wear on the motor than you using by
carrying around an extra half-tank of gas (40 lb.) on average.
Since the first of year, I am driving <600 miles a month, it feels
great to go three weeks in the tC without a fill-up :-)
You are missing the point. While it is true that people didn't use any more
fuel because they were keeping their tanks three quarters full instead of
half full, it is also true that the sudden increase in the amount of gas
being "stored" in the tanks of millions of car created a temporary supply
problem. Suppose tomorrow everyone in America decided they needed to fill-up
(all on the same day). Don't you suppose that might create a temporary
shortage? This is supposedly one of the factor that lead to long gas lines
during the fuel crisis of the 70's. When the oil embargo was announced, some
people who might have normally waited a few days until they purchased gas
ran down and purchased gas immediately. This sudden surge caused some
stations to run out. Other noticed that stations were running short, so they
too decided they needed to go buy gas immediately, resulting in more station
running short. This was only a temporary problem but the up tick in demand
was enough to upset the normal fuel supply system. It took day and alternate
fueling rules to get the daily demand back into line with the ability of the
system to meet the daily demand. Of course eventually demand dropped back to
the normal and as people dropped back to their old habit of running closer
to half a tank on average, there was actually a dip in demand.
I suppose it might. About the same as if everyone decided to buy a
dozen eggs from the grocery store. That wouldn't reflect anything
except a spike in gasoline or egg demand. Once people had filled
their tanks or gotten their eggs, demand would return to normal.
No, the fuel shortage was caused by Nixon's price controls. Nothing
else. Once the price controls were removed supply came back to normal
but the prices were higher.
The oil embargo was imposed by the middle east cartel. We only got
about 25% of our oil from them at the time so the embargo hurt and put
a crimp in supplies for a while but we could have lived through it.
The oil companies wanted to let the laws of supply and demand work to
balance it out. But the congress insisted that "We Have To Do
Something" so Nixon put price controls on almost everything made from
crude. If you can't make a profit supplying something, then were is
the incentive to supply it?
The funny thing was that oil tankers were laying at anchor just off
Houston waiting for the price of crude to go up, I saw pictures.
There was no shortage of crude because most of the middle east
countries ignored the embargo and what short fall we had was made up
by other suppliers.
Nice theory, but the wage and price controls had been in effect for several
years before the arab oil embargo tirggered the first wave of gas shortages
with the long lines. I had no problems buying gas in 1971, 1972, and most of
1973. I am only claiming that the sudden (but temporary) up tick in demand
related to people trying to keep their tanks full made the problem worse. It
was not the root cause, but a factor that contributed to the long gas lines
that appeared quickly after the Arab oil emargo started.
We did live throught it, but not without the pain of long lines at the
stations. Suppose someone cut off 25% of our oil today? How long would the
lines be tomorrow?
Again, a fine theory, but the price controls were in effect for a couple of
years before the long lines appeared. I do agree that the price controls had
an effect. However, the controls did not apply to imported oil. They did
discourage US exploration and production, so they increased our dependence
on foreign oil, which made the effects of the Arab oil embargo worse. BTW,
oil prices were not actually frozen under the Nixon policy - "Nixon's cost
of living council creates a price ceiling that allows stored oil to be sold
at 35 cents above the current prices and that newly produced oil could be
sold at uncontrolled prices. " Price controls on domestic crude oil actually
were actually more restrictive after the 1973 oil crisis had passed. I
suppose you could blame the 1979 shortages on these controls, but I can't
seee ow you can blame the 1973 crisis on the wage and price controls since
they didn't actually control oil prices.
Well now you are saying there was no shortage....please explain. I've heard
the story of tankers sitting off the coast from others (one ex-Coast Guard
guy in particular), so I assume it is true. But isn't that how an emargo
works? When the Arabs imposed their embargo, some of their oil was in
tankers under contract to them, so they stopped deliveries until their
demands were met, or when they needed the money (which is what actually
ended the embargo).
After an initial surge in demand to top off, assuming no changes in driving
behaviour, demand would quickly return to normal. Sustained increased
demand would have had to be caused by hoarding OUTSIDE of what you can fit
in your tank.
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