Saturday, March 5, 2011

Gasoline - Rising Prices, Same Old Schemes

There is a new scheme making the rounds on the Internet to force the oil companies to lower their prices. It is, of course, pure folly. It is a variation on the old "don't buy gas for a day" protest that has been circulating for years now. This one was supposedly "thunk up" by a retired Coca Cola executive, probably the one who was responsible for the idea of changing Coca Cola a few years back, only to be forced to re-introduce "Classic" Coke when the plan failed.

Sorry to tell you, but it won't work- most of us don't buy Exxon or Mobil directly to begin with. I use a local station that charges a few cents less per gallon. If everyone stops buying from Exxon-Mobil, then Exxon-Mobil's cost of providing a gallon of gas will rise, and they will pass it on. The smaller companies, seeing a rise in their customer demand for fuel will do exactly as Exxon-Mobil would do, raise the prices in lockstep with one another. Besides which, gasoline is what is known as a fungible commodity, that is, one which is transferrable. So boycotting one company will do little more than cause the fuel not sold by that company to be bought by another company, and the cost of the transfer will go directly to the consumer, compounding the problem. Here is the link to the "scheme" and the analysis of it on;

The same thing is happening all over the country now with water bills. The less you use - the more you pay- due to the added cost of having water treatment plants. The cost to run one is static, no matter the quantity of clean water produced and consumed. The only alternative is rationing, car pooling or getting a sense of urgency about developing alternative fuels that equals the way we got back in the car market after Japan blindsided us in the 1970's. (None of this happened after 9/11 so don't expect it to happen now.)

At this point, I would have to say that we are dancing to the fiddler's tune. Until the day that we are all willing to ration our use of gasoline, or car pool, as the country did in World War Two; the prices will continue to rise as an ever growing populace struggles to compete with an ever shrinking resource. Not to mention the politics, and money, involved.

In the meantime my 1996 Mitsubishi gets 30 mpg and has 195,000 miles on it. Long may she run!

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