A strange French e-mail is being circulated through the Internet. It is quite long, but it essentially urges consumers to stop buying gasoline from Shell/Esso (apparently it is the same company). The author explains that if no-one buys from this company, it will be forced to lower their prices. Then, if Shell/Esso lowers the prices, this will force their competitors to lower their prices too.
The e-mail doesn’t say that consumers should try to use less gasoline. I am not good in economics, but I am quite sure that if something like that happened, it would simply drive Shell/Esso out of business.
But what good will it do, if nobody can buy from them? That’s specificed in the email, right, that no one is to buy from Shell?
The short answer is no, this does not work to lower prices.
Let’s assume for the moment that no one bought from Shell for a month, and Shell suddenly had enough gas that they and they alone had to cut prices. During that month, all of the other gas stations have been able to raise prices (because they have one less competitor, and all of Shell/Esso’s gasoline has effectively been removed from the market, because no one is buying from them). Shell doesn’t need to lower their prices, they simply fail to raise them (every one else raises them, because they are getting their own business plus the portion of Shell’s that Shell isn’t getting). Suddenly, Shell’s is cheaper, so everyone goes to Shell. allowing Shell to raise their prices to where everyone else is. Net effect, even in the virtually impossible event that people wished to do something about gas prices other than whine about them: none what so ever. Possibly a slight raise, since Shell’s reserves would be unused.
