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A Tank Full of Economic Misunderstanding
Posted By Don Boudreaux On March 14, 2012 @ 1:31 pm In Prices,Seen and Unseen | Comments Disabled
Here’s a letter to the Programming Director at Washington, DC’s, WTOP Radio:
During this morning’s 8 o’clock hour I heard one of the most ironic lines that I’ve heard in some time. That this irony was unintentional makes it all the more telling.
Asked by your “pump patrol” reporter about rising gasoline prices, a motorist at a gasoline station noted that “My tank is actually way more than half full now. I’m topping it off because I’m sure the price will be even higher this weekend.” When your reporter then asked her “What do you think explains these rising prices?” she replied “Speculators.” Your reporter followed up with “Do you think they should be stopped?” The motorist responded immediately: “Of course! They’re criminal.”
Speculating that the price of gasoline will rise, this motorist took action today – buying gasoline that she otherwise wouldn’t have bought today – that puts upward pressure on the price of gasoline today.
Had your reporter pointed out that this motorist herself is speculating in gasoline, I wonder if this motorist would have persisted in regarding speculation as being criminal. I wonder, too, how she would react if government – heeding her advice to stop speculation – were to forcibly prevent motorists from topping off their tanks.
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030
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