Taxicab Confessions — DC (microeconomics)

As I buckled up the car slowly began its journey.  The driver told me to ignore the extra dollar visible on the meter.  The fee to cover higher fuel costs ended last Thursday and he hasn’t figured out how to unset that feature. (Meters are a novel thing in DC proper, by the way.  2 months old?)

Conversation started about the benefit of lower gas prices to taxi drivers.  Then the driver announced suggestively, “What I want to know is how the price went up so fast and then down again.” I blogged last May on the poor reporting, each explanation pointing to different cavern ignorance. “I’m not happy with the reporting. There’s no clear explanation of these price changes. One reason for the drop, though, is the slowdown of the US economy. Less demand.”

“So how do they actually set prices,” he inquired.

On this new supply-and-demand topic, we became stuck for a moment around the idea of “competition” and pricing. Are drivers competing for fuel or gas stations competing for customers? I had to imagine this specific hurdle in my mind.   I had to choose an appropriate response based on what I know and can clearly state. Not a simple act, though made easier since I don’t know much.  Supply and demand is one of those areas of knowledge which I have a hazy grasp of.  I can rely on getting it clear most of the time but examining the assumptions takes effort to connect the proper word to the proper image in my mind.

Relying on general ideas I added, “Assume there’s plenty of oil. Most drivers are willing to pay up to five dollars per gallon.”  That didn’t feel sufficient.  At least I didn’t just blather until interrupted in an effort to appear smart enough. Fortunately, my partner was with me.  Sounds of recognition audibly filled his cab.  “Oh, ok. If lots of drivers need to fill up, the station’s got the power to charge more.”  We extended this to the concept of economic slowdowns.

Did we talk about other topics, stay quiet, or remain on this one? I can’t remember. I do humbly appreciate my conversation partner’s willingness to share a question, to search jointly.  We brought a little bit of light into each others mind.  In the darkness of the unknown, companionship matters.  Isn’t that the way it should work?

Now,  just let me talk with some reporters and get some naked self-exposure about the many things we do not yet know.

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