Buffalo Skyline from BCT 800x135

Sunday May 18, 2008 at 10:43

Photo

Well here’s a ridiculously bad idea. Chrysler is offering a deal that if you buy one of their vehicles, they will give you a gas card that locks in the price of gas at $2.99/gallon. (Chrysler will reimburse you the difference). This gives the buyer the perverse incentive of buying the least fuel efficient automobile so they can save the most money. This will artificially inflate the price of gas by raising demand and, does nothing to address the problem of our dependence on oil and the preposterously bad average fuel efficiency. It would seem that the gas price situation must be pretty bleak if Chrysler is willing to offer an incentive like this. Chrysler: via: the Boston Globe UPDATE: Food in Mouth correctly reblogs me and says that the #4  American auto maker probably won’t have that large of an effect on changing demand for oil and therefore the price of oil. This is more than likely correct, Chrysler alone probably won’t be able to do this, but if other car companies begin to offer similar incentives, etc. etc. And either way, Chrysler is creating an artificially low price which as we all know from Econ 101 will have higher demand at that lower price. And Food in Mouth also believes that potential car buyers will do the math and see that they don’t stand to save much money based on this deal. I hope he’s correct, but I am less optimistic. Kenneth Galbraith coined the term “conventional wisdom” and by it he meant that anyone could choose to believe what they want to believe within a reasonable range and have evidence or theorists that would back them up. (From his book The Affluent Society). I’ve found in my conversations with family living in the suburbs and those that are automobile dependent, they choose to believe that the high prices are due to a constrained supply. So if you choose to believe that, then buying a Chrysler now that get’s 12mpg  makes sense with a locked in gas price and the likeliehood of gas prices falling sub $3/gallon in the near future. Which brings me to my original point, this does nothing to address the oil dependency problem. (Food in Mouth, thanks for continuing the discussion)

Well here’s a ridiculously bad idea. Chrysler is offering a deal that if you buy one of their vehicles, they will give you a gas card that locks in the price of gas at $2.99/gallon. (Chrysler will reimburse you the difference). This gives the buyer the perverse incentive of buying the least fuel efficient automobile so they can save the most money.

This will artificially inflate the price of gas by raising demand and, does nothing to address the problem of our dependence on oil and the preposterously bad average fuel efficiency. It would seem that the gas price situation must be pretty bleak if Chrysler is willing to offer an incentive like this.

Chrysler: via: the Boston Globe

UPDATE: Food in Mouth correctly reblogs me and says that the #4  American auto maker probably won’t have that large of an effect on changing demand for oil and therefore the price of oil. This is more than likely correct, Chrysler alone probably won’t be able to do this, but if other car companies begin to offer similar incentives, etc. etc. And either way, Chrysler is creating an artificially low price which as we all know from Econ 101 will have higher demand at that lower price.

And Food in Mouth also believes that potential car buyers will do the math and see that they don’t stand to save much money based on this deal. I hope he’s correct, but I am less optimistic. Kenneth Galbraith coined the term “conventional wisdom” and by it he meant that anyone could choose to believe what they want to believe within a reasonable range and have evidence or theorists that would back them up. (From his book The Affluent Society). I’ve found in my conversations with family living in the suburbs and those that are automobile dependent, they choose to believe that the high prices are due to a constrained supply. So if you choose to believe that, then buying a Chrysler now that get’s 12mpg  makes sense with a locked in gas price and the likeliehood of gas prices falling sub $3/gallon in the near future.

Which brings me to my original point, this does nothing to address the oil dependency problem. (Food in Mouth, thanks for continuing the discussion)