Enrique Gili is a freelance writer covering Lifestyles of Health and Sustainability (Are there sound economic arguements to boycott gas? I just received an email from an activist friend of mine urging me to stear clear of Exxon and Mobile. Stating: For the rest of 2007, DON'T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL. If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit.
I wonder about the soundness of that line of reasoning. Where do independent gas stations get their supplies from? Surely they don't have a fleet of trucks and refineries at their disposal. Wouldn't consumers drive prices up elsewhere as oil companies adjust?
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Comments
If a significant number of people stop buying from Exxon/Mobile, but continue buying from elsewhere, prices will go up at the other stations and down at the Exxon/Mobile stations.
"If they reduce their prices, the other companies will have to follow suit."
Why would they have to follow suit? They only have to follow suit if they are competing for customers with someone who is charging less. The whole hypothetical revolves around them *not* having to compete, because people are boycotting Exxon/Mobile.
Competition with Exxon/Mobile only reenters the equation if their lower prices cause people to abandon the boycott. With the boycott over, the other stations' prices will drop to compete, but Exxon/Mobile's prices will rise.
End result? Right back where we started.
What happens to our wallets during the process? If you boycotted, you paid more than you otherwise would have. If you didn't, you paid less.
Posted by: Colst | May 28, 2007 03:09 PM
Highly doubt that a boycott would make any impact. The large corporations have us right where they want us. Congress is powerless as these heady big wigs line their pockets and control them.
It's gone beyond sad and simply stated is pure greed.
Posted by: Sound | May 28, 2007 04:51 PM
There isn't real competition if the suppliers are price-fixing. Boycotting one brand simply means the gasoline that would have been sold under that label will be sold under another label. It's as pointless as refusing to buy gas Monday, then compensating by everybody buying Tuesday (when it would make good business sense for every vendor to raise their prices.)
Posted by: Gork | May 28, 2007 08:57 PM