New scheme to lower gas prices
 

I got an email today, as I'm sure many have by now, that has a new plan to get the price of gas lower. Essentially it calls for a boycott of Exxon/Mobil, the biggest gas company in the US. The hope is that if nobody buys their gas they'll we respond by lowering their prices. Hopefully this causes a price war and gets everyone else to follow suit. The boycott ends once prices reach $1.50 per gallon. That's the basic rundown of the idea.

It seems to me like this would work. It would take millions of people participating in order to be noticed though. Unlike the "Don't buy gas day" which was fatally flawed from the get-go, this seems like something that could be drawn out long enough to get the execs to pay attention. The drawback is that many gas stations are locally owned, so those local owners would feel the pinch first

Does anyone see a flaw in this idea?

The flaw is the entire idea.

Just a few:

First of all, exxon/mobil gas goes way beyond exxon/mobile gas stations. What about all the gas made from oil brought by the company and sold by other stations?

The rest of the gas companies do NOT have the capacity to supply us all with fuel.

Mass boycotts rarely work or a small time frame, let alone long enough for gas prices to go that low. Not gonna happen.

I see you're on myspace too.

It's surely a flawed idea. First of all, all oil from any major petro company is all mixed together at the ports anyway... and they get back an equal amount to the tonnage or barrels they've input. So, you buying a percentage of Exxon/Mobile oil no matter WHERE you go. Then it's a matter of individual stations like kutulu said. Aside from there being a few brand names for most major oil companies, all your mom and pop stations have to buy their fuel from somewhere... are you going to go to each station and ask who they get it from? I bet most attendants don't even know.

Its a stupid idea.

Quit whining about petrol prices anyway, the yanks still get it considerably cheaper than the rest of us.

One of the many flaws is the American personal consumer thinking that by filling up twice a week, they can make a difference. For any boycott to have any prayer to work (and I won't even conceed that it would), you would have to enlist the heavier users - long haul trucking companies, the airlines, the bus companies and the various state and local fleets. The large consumers make up the majority of fuel purchased in the US on any given day.

I don't use their gas anyway because it's invariably the most expensive. There are sites that post the cheapest gas in your area-just google 'cheapest gas'. Here, generally it's Gulf, Sunoco or Hess.
Every once in a while the same 'boycott exxon' email makes its rounds-I generally ignore them. People should be price savvy. If not, more power to'em.
Here in NJ, stations can change their prices once every 24 hours-this was made law after the oil embargos of the 70's. I don't know how many other states have that law, but, instead of worthless boycotts, state legislatures need to change that to restrict price changes to once a week or so and within reasonable guidelines.

Stupid, stupid, stupid.

Prices go down when demand goes down and supply remains constant/increases, or when supply increases and demand remains constant/decreases. Neither of those two scenerios are occuring here because you are just buying the same quantity of gas from another supplier. Also, why stop at $1.50? Is there any significance to that figure?

Exxon Exec: "Oh no: it seems people are irrationally boycotting our product until we lower our price to the seemingly arbitrary value of $1.50. We could reduce our price by a quarter to meet their demands, thereby losing out on huge amounts of revenue... or we could ignore the small fraction of 1% of our previous customers that are now boycotting us. I'll have to think on this one..."

Hi, my name is "Billege" and yours is "I'm new to the interweb."

I hope you enjoy your time here.

Thank you for adding the 138,344,355,662,aa_2,subp~10th,215^223th,214th thread on this idea.

Oh sweet Snopes: http://www.snopes.com/politics/gasoline/gasout.asp

Alright folks, no slamming the OP... not nice

frogza, I can't tell you how many times I've seen such ideas floated, and I'm only 24. Problem is, it doesn't work. For many reasons which others have already elaborated on. If you really want to make fuel less of a financial burden, change your habits. Buy fuel efficient vehicles, furnaces, fridges, air conditioning/heating systems, etc. Vote for politicians that support things like good mass transit and alternative fuel use, and follow up and take advantage of them.

You could also do the unthinkable and (*gasp*) drive less!

Here's another idea. Stop subsidising gas prices, forcing people to dump the big SUVs that they drive around because they can. I'm sure the US government could think of better things to spend that money on...

When oil runs out (as inevitably it will), you may wish you'd bought a 4 cylinder car earlier.

Thanks for the replies. Clearly a bad idea.

If anyone needs advice on how to become public enemy #1, I think I just stumbled across the best way. lol

Hardly public enemy number 1. Maybe only as high as... number 2 :D

I think part of the problem, is even if everybody uses no gas in their cars, the companies will still be able to buy and use gas at cheap prices. They need it to make plastics and do a lot of other things. Then you will have people saying, why should 'I' change my car and spend money to do so. I don't care if it costs $8-$20/gallon, I need to drive.

The US will be in trouble when gas prices get to $10/gal. They've gone up 300% in the last few years, and unless the Canadians can find an environmentally friendly way to extract oil from the oil sands, it seems like every other country that has oil could stop selling it to us for any number of reasons.

I think Carno put it perfectly.

It's a pathetic and stupid idea.

It doesn't hurt Exxon in the slightest as they will just end up selling excess gas at a premium to other gas companies.

Quit whining about the prices we Americans pay for gas. The ONLY reason you pay more is because your own people decided to tax the hell out of gas.

We get no special deals from foreign oil, your country buys it at the same price as we do.

That's what people never consider when comparing Europe and the US in gas prices. Europe also has state-paid healthcare and a crap load of other stuff that we US residents have to pay for ourselves. Europe's economy is set up for high gas prices, ours is not.

But that is not whats happening here. If you look at global supply and demand, which you must when talking about oil. In april 2004, a barrel of light sweet crude was around $35. Today it is over twice that. In april 5, 2004, the average price for a gallon of gas in the US was $1.96, on april 10, 2006 it was $2.88. So a 100% increase in a barrel of oil doesn't equate with a 100% increase in a gallon of gas. In the two years since oil has doubled, the average price for a gallon of gas in the US has increased by roughly 50%.

But we need to look at this globally. Since the global supply and global demand are what sets the price, right? Well using those same dates we can look at the price of gas in several european countries (Price of a gallon of gas in $US) and we find that:

• Belgium +29.5%
• France +22.6%
• Germany +14.8%
• Italy +18.9%
• Netherlands +20.6%
• UK +14.8%
• US + 46.9%

I'm not convinced that the US demand for gasoline has risen by twice as much as europe's demand for gasoline over the last 2 years. I would wager to guess our demand has remained constant, or increase slightly with time. Something is amiss and I'm not sure what it is. But I don't believe it is soley supply and demand.

Based on supply and demand there is no rationale for oil to be $74 a barrel. Speculation is what drives up the cost of oil, not demand-v-supply. Speculators fear a crisis with Iran and bid the price up. All the prices we hear about are futures prices.

Less than a year ago, for about a week we were paying roughly the same price for a gallon of gasoline, but we were told it was due to distribution problems due to Hurricane Katrina. Well, here we are paying the same prices and I don't see any distiribution problems.

Have we built any new refineries in the past few decades? No. Do we have unnecessary taxes on gasoline? Yes. Do we have unnecessary regulations on mixtures and other nonsense that vary from state to state? Yes. Do all these things create higher than necessary gas prices? Of course. But they don't explain why the price of gas in the US has risen at twice the rate a gallon of gas in europe costs, and I'm not convicned US demand has risen enough to validate such price increases. :hmm:

p.s. here's where I got the gas prices to run the little price increase analysis: http://www.eia.doe.gov/emeu/international/gas1.html

Quite simply, the US is catching up on the rest of the world.

Over here, prices are around about $6 a US gallon, even higher among some other countries. Having an economy set up around high petrol prices is well, a stupid idea. I can assure you that all the money from our petrol tax doesn't go to healthcare :hmm:

Rising prices in the states are a good thing, maybe it will discourage those oil refineries on wheels you like to drive. When things come up to the rest of the world, you can bitch with the rest of us.

When I get a chance I'll do the analysis again without taxes incorperated into the prices. As it looks to me, the US pays more per gallon of gasoline than all the countries I listed above, except for the netherlands. We aren't catching up to the rest of the world, because we aren't taxing gasoline 200%. Our taxes haven't changed and neither have yours.

Now that I think about it again. The correct way to look at it would be to look at the non-tax price of gasoline, since if the taxes remain constant they shouldn't be incorperated into the percentage increase in the cost. I have a feeling if I look at the numbers again, less the taxes, they might be closer together.

My original point still stands though, supply and demand is not what is driving Crude oil prices. If it was, you would be saying the demand for crude oil has more than doubled in 2 years. :eek:

I agree with that, even with the SUVs, that would be hard to accomplish. :crazy:

You guys might be right if you limit demand to North America, but when you look at the explosion of oil usage in India and China among the general population as well as other parts of the world, it's enough to drive demand through the roof. If only 10% of Chinese and Indians drive (remembering that each country has roughly 1,000,000,000 people each), that's an additional 200,000,000 drivers, which is roughly the equivalent of all the drivers in the US.

That's a big change in demand. It's not the entire reason for the increase in demand but the improving economies in those nations does have a serious impact.

At least you're thinking about the problem and trying to come up with productive methods of working with the American free market. Unfortunately, I tend to side with all the rest of these guys in that it just isn't going to work.

I'm a fan of "76" myself (That's Conoco-Phillips). When that's not available I go for "USA Gasolene" or "Shell."

I am not a fan of passing legislation to keep these sorts of things in check. If it is possible for a company to come out with cheaper gasolene, then we'll see them taking over the market. A boycott will not prompt this, but high gasolene prices on the whole. They have already begun to add higher corn alcohol content to the gas as a national standard, which will most likely lower the price in the long run.

Someone correct me if I'm wrong, but I'm pretty sure that opening a few more oil refineries in the United States would also have some positive affect on the price.

Yep, once you ignore taxes, you'll see this complaint doesn't work out. It takes less of a % increase in the rest of those countries to equal the same absolute increase as the US because of the fact that their prices were so much higher in the first place. Take, probably reasonable examples, $2.50/unit in the US versus $6/unit in western europe. If the market price of gasoline goes up $0.50/unit and that's the only contributing factor, that's a 20% price increase in the US compared to only 8.3% in europe.

but you're right, it's not straight supply and demand like that which is driving prices because that is not how the market works. It's not only direct consumers who are buying crude. The price is related to current supply and demand sure, but it's also related to FUTURE supply and demand as investors buy on speculation that the price will go even higher, and that future speculation is mainly what sets the price since production and consumption don't change much in that short of a term.

You still get it cheaper! We should be the ones trying to get it cheaper. Yes our goverment tax the hell out us. Is that our fault? If we were paying what you are paying Stevie would have nothing to say.

Yes... Yes it IS your fault. You elect your government that taxes the hell out of you.

I didn't :hmm:

Can you explain exactly why you think you should be getting it cheaper? There's a real sense of entitlement in your post that I just don't get. It's basically gas-price envy, and I just don't get it.

As far as the government taxing the hell out of you, yes that's your fault. If not you, then who? By the way, I think everyone on this board is using the plural form of "you", not the singular, so don't get all worked up. If you don't like it, vote for someone to change the system, or get other people interested in the issue. If that's too much work, then you don't care enough.

As of April 10,2006, here are the prices in US$ for a gallon of gasoline, without taxes:

• Belgium - $2.33
• France - $2.15
• Germany - $2.14
• Italy - $2.34
• Netherlands - $2.61
• UK - $2.10
• US - $2.50

http://www.eia.doe.gov/emeu/international/Gas0.xls (Excel Spreadsheet, beware)

If it weren't for taxes, the UK would have the cheapest gasoline of the countries on the list. The US would have the most expensive, except for the Netherlands. If we had more refineries and lifted state-to-state restrictions, we could get it just as cheap, if not cheaper.

But lets go back just a few more years. The average (and median) price for a barrel of crude since WW2 has been around $20 per barrel. When I spoke of April 2004, we were already involved in Iraq and speculation had already driven the cost of oil up to $35/barrel. But if we go to pre 9/11 days oil prices were averaging roughly $21/barrel in 2004 dollars. The median price was $17 in 2004 dollars. Only half the time since WW2 was the price for a barrel of crude more than $17! So even with China & India I find it hard to believe that world demand for oil has increased by 350%.

Some good reading on the history of crude oil prices: http://www.wtrg.com/prices.htm Its loaded with graphs and charts. Graphs and charts are cool.

edit: I just wanted to reiterate that the only thing driving oil prices is commodity traders fear (and greed - not that greed is all bad, after all they are just trying to make a living as well). Its just one guy trying to outguess the next guy on how much the next barrel of oil is going to cost.

I was listening to ben stein talk a few minutes ago and he was saying this exact same thing, except that he added the point that the commodity traders are providing a public service in that by , even though we may have high energy prices, at least we have energy. We don't have the shortages and empty fill-stations like we did in the 70's.

If you want lower energy prices lower the taxes on gasoline, build more refineries, drop the state-specific gasoline standards. But ultimately, in order to have lower prices for oil we need stability in the middle east to ease the fears of the commodity traders. When they sense stability the price of oil falls.