A different kind of Gasoline Boycott
A little background first on what Congress is doing...
Recently, the House passed HR 1252: Federal Price Gouging Prevention Act
This act criminalizes price gouging on gas, oil and other fuels. In particular, it also covers market manipulation, large fines and jail-time. Many consumers believe that the oil companies employ Enron-like techniques like shutting down refineries to reduce supplies and raise prices.
The bill was introduce on Feb 28, 2007 by Democrat Bart Stupak (yes, that is really his name and not a GOP "mispronounce" of Sestak) and a few dozen co-sponsors. Joe Sestak eventually, became one of the 125 cosponsors on May 21st and the bill passed the House on May 24th. It is now in the Senate. Even once it passes, there is going to be some lag is setting up rules, oversight, etc.
So, it's a good start, but it's going to be a while before we see some results. But there is something we can do in the meantime.
Okay, now to the boycotting part..
I recently receive emails from three different friends about a new kind of gasoline boycott.
The idea is that since Exxon and Mobil are the biggest companies that they have a lot of influence on the pricing. Therefore, the boycott would be against Exxon and Mobil only and people would still buy to other brands (BP, Getty, Hess, etc.)
The theory is that supply and demand would force Exxon/Mobile to lower it's prices to draw back the customers.
The hope is that seeing the lower-prices, the other stations would lower their prices to keep the "boycotters" from going back to Exxon/Mobil. A few cyles of this "price lowering war" should get prices closer to actual costs.
So, while government enforcement is welcome (and long overdue), we need to realize that we can change the behavior of large companies if we are willing to work together.
There are plenty of places online to find stations charging less than Exxon/Mobil, however one of the best is http://www.phillygasprices.com which is the Philadelphia area section of the nationwide http://www.gasbuddy.com.
Recently, the House passed HR 1252: Federal Price Gouging Prevention Act
This act criminalizes price gouging on gas, oil and other fuels. In particular, it also covers market manipulation, large fines and jail-time. Many consumers believe that the oil companies employ Enron-like techniques like shutting down refineries to reduce supplies and raise prices.
The bill was introduce on Feb 28, 2007 by Democrat Bart Stupak (yes, that is really his name and not a GOP "mispronounce" of Sestak) and a few dozen co-sponsors. Joe Sestak eventually, became one of the 125 cosponsors on May 21st and the bill passed the House on May 24th. It is now in the Senate. Even once it passes, there is going to be some lag is setting up rules, oversight, etc.
So, it's a good start, but it's going to be a while before we see some results. But there is something we can do in the meantime.
Okay, now to the boycotting part..
I recently receive emails from three different friends about a new kind of gasoline boycott.
The idea is that since Exxon and Mobil are the biggest companies that they have a lot of influence on the pricing. Therefore, the boycott would be against Exxon and Mobil only and people would still buy to other brands (BP, Getty, Hess, etc.)
The theory is that supply and demand would force Exxon/Mobile to lower it's prices to draw back the customers.
The hope is that seeing the lower-prices, the other stations would lower their prices to keep the "boycotters" from going back to Exxon/Mobil. A few cyles of this "price lowering war" should get prices closer to actual costs.
So, while government enforcement is welcome (and long overdue), we need to realize that we can change the behavior of large companies if we are willing to work together.
There are plenty of places online to find stations charging less than Exxon/Mobil, however one of the best is http://www.phillygasprices.com which is the Philadelphia area section of the nationwide http://www.gasbuddy.com.
posted by David Diano at 12:34 AM
2 Comments:
Will avoiding one company's gas stations effectively and permanently drive prices down? No. In fact, it would likely have the opposite effect, if any at all. Gas is a commodity. Commodity markets work on the law of supply and demand. When supply is higher than demand, sellers lower the price until the two factors equalize again. When demand is higher than supply, sellers raise the price to curb use and stretch supplies until, once again, the two factors equalize.
Just for the sake of argument, let's say we successfully organize the ExxonMobil boycott (I know this is fantasy, but hang with me here). ExxonMobil loses business and lowers prices to lure you back. The other stations will follow suit and lower prices to compete, right? Not quite.
To avoid ExxonMobil you go to the Speedway across the street, instead. Speedway's business increases, causing them to raise their prices to try to control demand, otherwise their supply would be quickly depleted. Their higher prices drive customers to Shell, who in turn raise their prices and drive customers to BP, and so on. Eventually, supply and demand will equalize and all stations will have the same price again.
As consumers, we can do little to control supply, but we can control demand. However, effectively doing so means reducing demand overall, not just at one station. The reduction in demand must be severe and long-lasting. If you want to save money at the pump, slow down on the freeway, plan outings to get everything in one trip, walk more, and trade in that gas-guzzling SUV for an economical compact car for starters.
Other popular armchair activist campaigns to lower prices have called for consumers to buy only the gas they need, stick to stations that only buy fuel from domestic sources and ask the President to lower prices. The original "Gas Out" idea has also returned.
Anonymous-
You make some excellent points. I wasn't so much advocating the Exxon/Mobile boycott as trying to point out an idea that has been circulating recently.
I agree that reducing demand is the most effective solution. Getting car companies to improve mileage standards would also be a tremendous help.
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