Logistics of Fuel Boycott
Fuel prices are coming back down. This is a good thing. Of course they are coming back down only because of the actual slacking of demand on oil right now. That is largely coming from the decrease in demand from the United States, which has been in gasoline sticker shock from most of the spring and summer of this wonderful year so far. It should also be noted, that a lot of the saber-rattling that has been going on so far in the last few months over in the middle east has amounted to nothing and that weather predictions have thus far proved to have little impact on production as well. Are the fuel prices we are paying at the pump likely to go back below $3.00 per gallon? It could, but I doubt it will personally. Certainly the days of $1 and change gas per gallon are long past us. Of course none of that takes in account the additional factor of the weak dollar relative to other currencies, which will further tend to drive our cost up, as our dollar buys us less. But that is not what I want to speak of really with this email What I wanted to touch on was the idea that I see rotate through my email spam box about once ever week or two.
When gas first started its sharp increases back in the early spring and even late fall of the previous year I saw it nearly daily. It is the notion that somehow if we put enough pressure on a single gas station, that they will be forced to lower the price or that further if we put pressure on all the gas stations on a given day they will drop the price for the next day. Lets start with the later of those two. Boycott the pump on Thursday the email will say, and by doing this big oil will get the message that we mean business and lower the prices. Folks it will simply not work.
First of all, how gas is generally a necessity. And while there are a grand number of us who would willing comply to not getting gas on Thursday – we are not changing the basic amount of gas that will be used over a given week and especially a month much at all, and certainly not in a mathematically significant way that would affect the demand. And if demand is not lessened, supply is constant, the price will also stay the same. Take it a step further though, I have a family fuel-efficient car. I typically fill up the tank on Friday sometime just about every week, short of travelling on the weekends – where I will refill on Mondays if I am not near full when I return. So my boycotting the station on Thursday of fuel is not really a boycott at all?
Put that in a different situation though – the guy who sees the email late Wednesday night, has just enough gas to basically get back to the station at the end of the road he lives on for his daily commute to work – think he is going to skip work so he can comply with the boycott? Now consider the millions of people who didn’t even get the email – either they are not online or, like me, they have it filtered to spam. If you think about though, without have a boycott of stations on a given day, but rather an actual decrease in fuel consumption. Largely through folks actively pursuing more efficient vehicles and the notion of staycations - we have reduced the demand for the product that has had a fairly consistent supply. Now lets look at the other suggested situation.
We boycott one station or one brand of stations and we do this consistently so they are forced to reduce the price. Well, at first glance this one seems like it might go a bit further. However, lets break it down and lets start by assuming there are just two stations in a general area served with enough traffic to fully merit the business of both. It is very likely that as the one station is not selling any fuel at all, they may reduce the price to slightly less the fellow across the street. However, the converse could also be true. If the one station is truly selling fuel then demand at the other one has doubled. To cover the extra fuel deliveries and even likely additional staff, it is possible that they could raise the price. Especially if they begin to think they have some sort of monopoly on the fuel in the area – basically taking advantage of the increased demand on the supply that is limited (or that would have to double to the specific location to even stay even). If you continue to boycott the one station for fuel it will eventually just close the pumps (as they have a cost associated with them even if they are not be used) and become just a quick food mart – or even close completely – truly giving the competitor a monopoly in the area and the ability to raise prices at will. Expand that out boycott one brand of station, say BP. All the other stations profit from fuel sales and BP’s has fuel sitting there getting old. Maybe they do drop the price on their fuel and we all run to them to start filling up. As soon as the fuel is sold, they will be buying fuel and it will go back up to the cost that everyone else has it has if the over all supply and demand have stayed the same. In the worse case, we boycott BP and they end up going bankrupt. Think that helps us any? I do have to wonder though if maybe some of these fuel boycott schemes come from the same folks that do the airline ticket pricing.
