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RE: gas prices...read when you have a chance...

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From: Lawrence A. Parker (occti_at_TeacherArtExchange)
Date: Thu Feb 27 2003 - 14:46:18 PST


From Snopes.com, pretty much what I was thinking when I read the
message. Sorry, Judy; it would work if the oil companies weren't market
octopi (boy, I hope that plural is right!). What if we just keep all
the young boys home from going to war?:
***************************************************************
Gas Out Claim: Boycotting a couple of gasoline brands will bring overall
gas prices down.
Status: False.

Examples:

[Collected on the Internet, 2002]
Gasoline prices are projected to reach $3.00 a gallon by the summer. Do
you want prices to come down? If some united, intelligent action is
taken, consumers can have a significant impact.

Last year, the "don't buy gas on a certain day" campaign was laughed at
by the oil companies who knew consumers were only going to hurt
themselves by refusing to buy gas, because of the personal
inconvenience. Let's not repeat history.

BUYERS control the marketplace....not sellers. With the price of
gasoline going up (currently between $1.50 - $1.95) and raising daily,
consumers need to act. The only way we will see the price of gas come
down is if impact the bottom-line of the oil sellers and not purchasing
THEIR gas!! We can do that WITHOUT inconveniencing ourselves. How? Since
we all rely on gas for our cars, we can't just stop buying it. We CAN,
however, force a price war.

Here's the idea:

For the rest of the year (beginning now-just after April 1st), DON'T
purchase gasoline from the two biggest companies -- EXXON and MOBIL. If
they aren't selling gas, they will be lower the sale price. If they
lower the price, other companies will have to follow suit.

To have an impact, we need to reach literally millions of Exxon and
Mobil gas buyers. It's simple. The person who started this email message
sent this to about thirty people. If each of them send it to 10 more (30
x 10 = 300) and those 300 send it to at 10 more (300 x 10= 3,000) . . .
and so on, by the time this message reaches the sixth generation of
people, we will have reached over 3 MILLION consumers! If those three
million get excited and pass this on to ten friends each, then 30
million people will have been contacted! If it goes only one level
further, you guessed it . . . and THREE HUNDRED MILLION PEOPLE!

So, please send this to ten people.

How long would it take to reach 300 Million? If each of us sends this
email out to ten more people within one day of receipt, all 300 MILLION
people could conceivably be contacted within 8 days of origin. I'll bet
you didn't think you and I had that much potential, did you? Acting
together we can make a difference. If this makes sense to you, please
pass this message on.

GIVE IT A TRY. If the oil companies lower prices, we all win.
Start now by sending this to 10 people and filling-up at a non-Exxon,
non-Mobil station.

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[Collected on the Internet, 2001]

Gasoline Prices

Whoever started this has a good point.

By now you're probably thinking gasoline priced at about $1.49 is cheap.
Me too! As it is now $1.58 for regular unleaded. Now that the oil
companies and the OPEC nations have conditioned us to think that the
cost of a gallon of gas is CHEAP at less than $1.50, we need to try an
aggressive response. With the price of gasoline going up more each day,
we consumers need to take action. The only way we are going to see the
price of gas come down is if we don't buy it. But, that's not really a
practical option since we all have come to rely on our cars. But we CAN
have an impact on gas prices if we all act together.

Here's the idea -

For the rest of this year, don't purchase gasoline from the two biggest
companies (which now are one), EXXON and MOBIL. If they are not selling,
they should be inclined to reduce their prices -- and if they reduce
their prices the other companies will too. But to have an impact, we
need to reach literally millions of users. But it's doable!

I am sending this note to 35 people. If each of you send it to at least
10 more ... and those 10 send it to at least 10 more ... and so on by
the time the message reaches the sixth iteration we will have reached
over one million consumers. Acting together we can make a difference. If
this makes sense to you, please pass this message on, or one you
compose, to at least 10 more.

Thanks for your consideration.
*****************************************************************
Origins: Ah, springtime! The season for a number of important renewing
rituals: housecleaning, the beginning of baseball season, balancing eggs
on their ends, and the forwarding of outraged e-mails calling for oil
company boycotts.

This year's litany is the usual one: Gasoline prices in the USA are too
high; gasoline is a unique commodity whose price isn't subject to the
usual market forces of supply and demand; OPEC and greedy American oil
companies have deluded us into believing that current gasoline prices
are actually comparatively cheap while they secretly manipulate the
market to keep prices artificially high; and a simple boycott of a
couple of brands of gasoline will rectify all this. (It's amusing that
calls for "gas outs" predictably occur every spring, just when gasoline
prices start to rise with the increased demand that accompanies the
better driving weather of spring. Why don't those evil oil companies,
who can apparently control the market at will, conspire to jack up their
prices during winter, when prices bottom out?)

It is true that the gasoline market in California is particularly
volatile, generally resulting in higher prices there than throughout the
rest of the USA, because:

California is the second-biggest gasoline market in the world, outranked
only by the United States as a whole. (California alone consumes as much
gasoline as all of Japan.)

All of the state's refineries, running at full capacity, cannot meet
California's one million barrels per day consumption, requiring the
importation of more expensive product to meet consumer demand.

Since 1996, California has required a cleaner-burning formulation of
gasoline which is produced at few refineries outside of California.

The four largest oil refiners in California produce almost 80% of the
gasoline supply, and the six largest refiners operate about 85% of the
retail gasoline outlets.
All of this makes California particularly susceptible to price increases
whenever the gasoline supply is disrupted due to factors such as crude
oil production cuts by OPEC nations or problems that temporarily shut
down refineries. In fact, however, gasoline prices will probably be
lower this summer than they were in 2001 and 2000, and they'd likely be
even lower if it were not for a couple of disruptions to the supply of
crude oil: Iraq's cutting their oil exports (to protest Israel's
military actions in the West Bank) and political unrest in Venezuela
(one of the largest exporters of oil to the USA).

Oil companies can manipulate their prices somewhat by controlling how
much gasoline they produce and where they sell it, but they can't alter
the basics of supply and demand: prices go up when people buy more of a
good, and they go down when people buy less of a good. The "gas out"
schemes that propose simply shunning one or two specific brands of
gasoline won't work, however, because it's based on the misconception
that an oil company's only outlet for gasoline is its own branded
service stations. That isn't the case -- gasoline is a fungible
commodity, so if one oil company's product isn't being bought up in one
particular market or outlet, it will simply sell its output to other
companies:
*******************************************************************
Economics Prof. Pat Welch of St. Louis University says any boycott of
"bad guy" gasoline in favor of "good guy" brands would have some
unintended (and unhappy) results.
. . . Welch says the law of supply and demand is set in stone. "To meet
the sudden demand," he says, "the good guys would have to buy gasoline
wholesale from the bad guys, who are suddenly stuck with unwanted
gasoline."

So motorists would end up . . . paying more for it, because they'd be
buying it at fewer stations.

And yes, oil companies do buy and sell from one another. Mike Right of
AAA Missouri says, "If a company has a station that can be served more
economically by a competitor's refinery, they'll do it."

Right adds, "In some cases, gasoline retailers have no refinery at all.
Some convenience-store chains sell a lot of gasoline -- and buy it all
from somebody else's refinery."

A boycott of a couple of brands wouldn't result in lower overall prices:
Prices at all the non-boycotted outlets would rise due to the
temporarily limited supply and increased demand, making the original
prices look cheap by comparison. The shunned outlets could then make a
killing by offering gasoline at its "normal" (i.e., pre-boycott) price
or by selling off their output to the non-boycotted companies, who will
need the extra supply to meet demand. The only person who really gets
hurt in this proposed scheme is the service station operator, who has
almost no control over the price of gasoline.

The only practical way of reducing gasoline prices is through the
straightforward means of buying less gasoline, not through a simple and
painless scheme of just shifting where we buy it. The inconvenience of
driving less is a hardship too many people apparently aren't willing to
endure, however.

Last updated: 30 April 2002
  
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Urban Legends Reference Pages C 1995-2003
by Barbara and David P. Mikkelson
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   Sources:
    Brooks, Nancy Rivera. "Crude Oil Prices Continue to Climb."
    Los Angeles Times. 9 April 2002 (p. C1).

    Brooks, Nancy Rivera. "Gas Supplies Manipulated, Report Says."
    Los Angeles Times. 30 April 2002 (p. C1).

    Levins, Harry. "Trying to Avoid Gasoline from Arab Oil Is Futile,
Experts Say."
    St. Louis Post-Dispatch. 21 April 2002.
     
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Lawrence A. Parker
Philosopher and Educational Consultant

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