or atleast my best effort to make it that...
I was talking to my 9 year old sister the other day about gas. The price and all that stuff really doesn't affect her life from her perspective of course, so it really wasn't that important for her to understand. The thing is that she's a very nervous, "worry wart", so she asked me why I get excited about gas prices and why I talk about them a lot.
The truth of the matter is that I really, really, like just about anything dealing with math. The charts, graphs, and all that other stuff is a lot of fun for me to figure out so trying to understand supply and demand, and all of these other economic concepts, is fun for me.
So, from what I just sad, what do you think I tried to explain first? Supply and demand. Right. I decided to go with dolls. I said, “Assume you’re in a toy store and you want a certain doll.” (by the way, I’m not putting name brands in for a reason. I assume you can pick out the brands I would have actually used in the conversation). “And now, pretend this is the only one like it and there were ten girls that wanted it. Don’t you think that those other girls would want it really bad and would pay more if they got it and you didn’t? Well, that is because there are more people wanting something than there are things to sell, so the price goes up to sell to the people who will pay more for it.”
“Now imagine you’re at the same store again. This time there are twenty dolls and only 2 girls. Since there are more dolls than girls the company has more dolls than girls and needs to get rid of them so they sell for less trying to get you to buy the rest of them.”
I continued to explain to her that the dolls were the supply and the girls and her were the demand. Then I went about showing her how it compares to gasoline.
Well, obviously, that covers a lot of the issue for her, but I figured that since she’s learning about atoms and so on she could probably deal with a little bit deeper explanation.
I explained how some cars use more gas because they do more or are dirtier than others. This took a few minutes to explain how engines lose gas mileage through many different circumstances. This just seemed to confuse her so I summed it up real fast by saying, “Usually big cars and trucks use more gas so they can pull stuff so they make a bigger demand than cars like mine.”
That seemed to work pretty well. I continued to explain that some people would say we’re running low on gasoline and that that’s just the American’s supply dropping and not the earth’s supple dropping. That didn’t take much to explain thank goodness so we then jumped to a new subject.
For this little bit of time I tried to explain why not only gasoline are prices going up, but that different stations have different prices and different grades cost more due to the different (better) chemicals used to make them.
For some reason I don’t think it all stuck because after we got done talking she asked me, “Okay, but why do you have to pay more for gas if there’s enough gas and if there is a way to make the gas better?”
My only thought right then… “I don’t know. Ask mom!”
I knew that it was too soon to explain this to her at that point. I was just glad she cared to listen.
Off the subject of my sister… I’ve heard a lot of different opinions recently and am now I’m just struggling to understand why we can’t put into action the 500 mpg engines. I’m sure you’ve heard about them. If not, I can try explaining a little bit of it. Basically, the gas will be composed of a lot more methanol and ethanol than petroleum which will drop the price of gasoline and increase gas mileage. The engines will also be expandable to do the same thing. Two more possibilities to help with gas mileage are hybrid engines and solar panels. With all the different combinations the end result would be a car that runs on nearly 500 mpg.
The reason I’ve been given is because the gasoline companies helped support him financially. If he does this though, I truly believe that it could help his approval rating and he could be gaining financial support from the companies making the new engines instead.
One last thing I’d like to add. Recently in Newsweek Magazines there was an article stating that the prices are up but the comparison of gas to income is a much lower than it has been during other big increases so even in such a bind we’re really not that bad off.
I just want to see these new engines! That sounds like they’d lead to the new age of transportation. And I’m not one to argue with advances, as long as people remember to respect the advances. (ex: e-mail isn’t fast enough anymore so some people just sit on IM all day long to make sending messages faster)
I went in a few different directions but mostly I wanted an excuse to talk economics without trying to look like I knew enough to make a big debate about it.
Capt. Over and out!