Gas Face Special: Behind the boycotts, why they don’t work

Talk Stock Trading - Financial Market News:

Have you ever received one of those “boycott the gas station” e-mails? In the aftermath of Hurricane Katrina, gas prices shot up and I got my first e-mail with the subject line “FW: Don’t get gas from ExxonMobil.”  Soon after, I received “Don’t buy gasoline on 9/1/05.”

I was irritated by the high prices but, unfortunately neither one of these plans would provide a solution.  Let’s debunk the myths.

Boycott#1: Don’t buy gas from ExxonMobil. 

Desired result: ExxonMobil will have excess supply and be forced to lower prices.  Other stations will have to follow.

Why it will not work: Oil companies sell oil to refiners.  Refiners sell to distributors, who in turn sell the oil to station owners.  There is no exclusivity in this process.  Just for the sake of an example, gas originating from ExxonMobil’s oil can be used to fill up a BPAmoco station.  So, if we all boycotted Exxon Mobil, their stations would have a surplus of gas.  Our new stations of choice would then face shortages.  The stations with shortages will then be forced to buy from companies who have a surplus. Who would be at the top of list?  Our beloved boycott victim: ExxonMobil.

Boycott #2: Don’t buy gas on 9/1/05. 

Desired result: Excess supply will cause prices to instantly decrease.

Why it will not work: The excess supply caused by a one-day boycott would end up being used quickly anyway.  People will still drive and thus consume the same amount of gas.  Whether it is purchased the day before or the day after the proposed boycott, it will be purchased.  That’s really all that matters.

Bottom line on these boycotts: Unless the masses permanently decrease consumption, these methods will not effectively influence prices.

Leave a comment and cast your vote for “Who gets the gas face” now!

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