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Re: Gas Boycott
Posted by Harris Robert B (more from Harris Robert B) on Mon, 20 Mar 2000 21:50:45
In Reply to: , Kok Chen, Sat, 17 Dec 1988 12:00:00 

The problem with reducing gasoline taxes is that it doesn't deal with the
underlying problem, which is reduction of supply by a cartel (OPEC),
combined with demand that is very unresponsive to price.  Lowering gasoline
taxes would be great for OPEC, because it would reduce the pressure for
them to lower price.  Do we really want to subsidize OPEC's supply
restrictions by lowering gasoline taxes and making it easier for them to
raise price?

The simplest way to bring down gasoline prices is to reduce demand--not
through gimmicky 3-day boycotts that merely change the timing of
demand--but through actual changes in driving habits. Luckily, only a
slight drop in consumption would result in a large drop in price (it took
only a 6% drop in supply to cause the big runup in price, and a
corresponding drop in consumption would bring it back down).

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