I got this in the mail :
So anyone care to remind me why this won’t work at all?
Well I doubt it will work, but it is not impossible. It certainly has a better chance of success than the “boycott for a day” scheme which was just silly.
First off, let’s deal with:
People do economise on fuel. Over time they accelerate less abruptly, keep their cars better tuned, buy smaller cars, move closer to public transport, and demand that car-makers devise more fuel-efficient or alternatively-fueled cars.
Now to the question. Whether a boycott of this sort could work depends on the structure of the industry. If the industry is fairly competitive (and it is a mistake to suppose that just because there are a few large players it is not) then a boycott of this sort won’t work. Indeed average prices will rise since smaller retailers will be operating above normal capacity.
If however the industry is oligopolistic and there is tacit price collusion going on, there is a chance that a boycott of this sort will create a competitive stir and existing tacit agreements not to compete on price will be undermined as the majors lose market share.
The crucial point here is that the underlying reason for higher fuel prices is the activities of OPEC. In the face of continued demand growth OPEC is slowing supply growth. I very much doubt that the activities of oil companies themselves has much if anything to do with the higher prices. Of course it is true that some ill-conceived action of this sort will somehow result in political pressure to lean on OPEC or reduce fuel taxes.
The problem is that if demand for Exxon and Mobil gasoline declines and they reduce their prices, people will immediately switch back to buying from them. Exxon and Mobil could then raise their prices back up. Let’s say people could resist buying from E&M for a month. E&M would drop their prices while their competitors would raise their prices (as picmr points out). Eventually, the price differential would be too great for consumers to ignore, and they would switch back to E&M. E&M would begin to raise their prices, and the competitors would lower their prices.
Bottom line, their are two ways to lower gasoline prices: increase supply or decrease demand. Assuming different companies have fairly comparable cost of production and distribution, switching from one to another may provide the individual consumer with short term savings but will not change the overall picture.
My WAGs:
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If everyone buys HESS gas let’s say, HESS is going to run out of gas. Prompting people who pull into HESS to then go down the street to the Exxon or Mobil down the road. Gas isn’t an infinite supply at these stations, they have huge tanks underground that need to be refilled. I don’t think the other stations could accomodate all the people that go to Exxon and Mobil on top of their regular customers. This might even result in HESS raising it’s prices. More demand = Higher price right?
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Most people go to the station that is nearest them. The closest station to my house is Amoco, so I go there. Nobody wants to drive out of their way to go to Bob’s gas instead.
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Places like Bob’s gas station just don’t look all that nice. Amoco, Mobil and Exxon are nice and clean and always have good squeegies to use.
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Only Exxon and Mobil would lower their prices to attract more customers. As soon as people started going back then everything would balance out again.
By the way, I’ve seen two gas stations across the street from one another with prices different by 1 or 2 cents. So there must be some competition. Though saving one cent per gallon (15 cents when I fill up the whole tank) isn’t enough to make me go to a different station. Offering the 93 for the 89 price on certain days works though.
I’m no expert though.
The problem with this scheme (aside from it being a chain letter) is that it does not take actual gasoline supply chain into account.
Here is a cite, specific to Arizona but useful nontheless:
http://www.ag.state.az.us/gasrpt.html
I can’t see any benefit to a boycott of major-brand gasoline stations, except to force marginal businesses to close, reducing the number of outlets and therefore reducing competition in a given area.
Here’s a semi-rhetorical question: if major-brand gasoline stations are so successful at gouging the consumer, why have I noticed so many such stations closing down over the past year in my area (between Philly and Reading, PA)?
If one boycotts Exxon, but simply goes down the street to buy fuel at WaWa, chances are that at least some of that fuel was supplied by Exxon, through a wholesaler.
If one really wants to see lower fuel costs, drive less or drive a more fuel-efficient vehicle.
And really, is $1.50 a gallon really that big a deal? I was paying $1.00 a gallon in 1984 or 1985 (actually, that was after the price had gone down), and was happy about it. A 50% increase in 15 years doesn’t sound that bad.
I’ve got to weigh in on this one in response to Frog’s post. Squid and I both drive a long way every day (there is no option for public transportation or even carpools or we would certainly take advantage of that). When we were spending roughly $1 per gallon of gas we spent $6000 on gas in one year.:eek: Having that number raised by 50% the next year is a significant factor in our household budget. I haven’t met my gas budget limit since Priceline gas went belly up, which means other aspects of our life (and children’s lives) are paying for it.
I’m sure there are others out there who find the price of gas not just annoying, but a serious detriment to their lifestyle.
//end small hijack//
WOW! So on average you EACH drove 164 miles a day (or 60,000 miles a year) assuming a normal (I think) mpg of 20. That’s impressive. I hope it wasn’t a lease 
And if you drove at an average speed of 65 mph, you each spent 37.5 days each year driving. (Am I annoying yet?)
$1.50 a gallon is nothing compared to what just about every other nation is paying for gas/petrol.
Stop whining. Like someone said, get a more fuel-efficient car.
IIRC, I heard about some laws that went into effect that said that all gas stations had to replace their old underground gas storage tanks with new leak-proof tanks. If the stations didn’t do this, they were hit with a hefty fine. So some stations replaced the tanks while other had to close down because they couldn’t afford the new tanks or fines.
Here’s another thought - you stop buying from one company, you’re going to start buying elsewhere. So even though Exxon may feel the need to lower their prices [/biiiig stretch], whoever you start buying from may just feel like raising theirs, since they’re doing so well.