will. If a day's worth of gas were truly not sold, the oil companies
would most definitely feel the impact. They would feel this impact
because they have such low profit margins.
However, without severe behaviour modification by the "gas out"
participants, the oil companies will not lose out on a day's worth of
gasoline sales.
This is because on a gas out day, people will consume the same amount
of gasoline they do on any other day. If they would have bought
gasoline on "gas out" day, they will either have to plan ahead and buy
gas the day before or put it off until the day after "gas out". The
sum of gasoline purchases will not change, and one day isn't enough to
significantly affect inventories.
So, the net effect to the oil companies: NOTHING.
And about this idea of boycotting one oil producer per week. The same
kind of logic could apply to this. Let's say there are 5 producers
targeted. One week every five, that company isn't selling squat. But
the other four are taking up the slack. If you regularly go to Exxon,
but it's on the no-no list and you run out of gas, you'll go to
another station. The banned business will be divided into roughly 4
equal parts, each of the oil companies picking up that business. So,
each company loses a week's business, but for those other four weeks,
they are getting 1/4 of another co.'s business. 1/4 times 4 weeks
equals one weeks worth of business to make up for the business lost.
Again, net effect? NOTHING.
But it's not that simple. Oil refining is one of the most
capital-intensive businesses around. It costs an absolute shitload of
money to build an oil refinery, and an absolute shitload of money to
find and extract oil to supply these refineries.
If a law firm gets a temporary rush of business, the workers can put
in longer hours to do the extra work. This can't happen at a
refinery. Because the refining equipment costs so much, the absolute
minimum is installed. Oil companies can only process as much as the
refineries are designed for.
Refineries would have to boost their capacity by 25% to produce the
same amount of gasoline (on a yearly basis). If the capital costs go
up 25% to produce a unit of gasoline, guess what else will rise about
25%. DING DING! That's right! Prices!
That's probably not the result we were looking for.
Sure, they could just upsize inventory space, too, which would not be
as expensive, but it would still force up prices because storage of
petrochemicals is expensive due to inert blanketing or floating roof
equipment, equipment for recovering solvent vapors, chances of spills
and fires, and environmental regulations.
STILL THINK YOU ARE GETTING RIPPED OFF?
Cash in! Start your own oil company and get in on these outrageous
profits they are making. You can charge less and still make a big
profit. You will be everyone's hero. People will buy gas from you
exclusively. Take those profits, build more refineries, more gas
stations and go national!
Don't have the fifty million dollars to build a small refinery you
say? Court investors. Investors are always looking for someone who
has an idea for a fast-growing company.
Why won't this work? Because it has already been done before by
companies like Exxon, BP, Conoco, etc.
Oil companies only have profit margins of around 5% of income. It is
a very competitive business. If the companies were all charging
outrageous amounts, one of the companies would get the great idea of
stealing away business from the others by lowering prices. And that's
what does happen.
You don't believe that they only make around 5% profit? When I was
looking for a job with my chemical engineering degree, I considered
getting a job with Exxon. I decided against it (even though they were
paying a LOT to new employees) because between 1986 and 1996 (I think)
they had laid off half of their workforce. The industry is so
competitive that their workforce often has to be cut so that the
business doesn't go bankrupt, even during mild cyclical swings.
So how much of their price could oil companies cut? At most 5%, and
at that level, they would deteriorate because no one would invest in
them (no profit, no reason to invest).
HOW TO CUT GAS COSTS?
1) Easy. Buy a car with better mileage.
2) Lobby for lower gas taxes. If I have it right, the average tax per
gallon of gas in the US is $0.38. So, for a $1.15 gallon of gas, less
than 4 cents is profit ( [1.15-0.38]*0.05 ), but $0.38 is tax. If
those taxes were alleviated, gas would be only 77 cents per gallon.
3) Don't drive so much. These "gas out" days or weeks would work if
you would cut out the driving you had scheduled for a day (or week)
AND not reschedule it. For that to work, you have to CUT net miles
per year. That would not only cause extra surplus, forcing refineries
to cut into their $0.04/gallon profit, but cause you to buy less
gasoline.
>:Ok folks I just got this in E-Mail today, and this seems like a more viable
>:method. At least one company a week WILL feel our wrath.
>:
>:
>: If you haven't heard, April 30th has been targeted as a one day
>:event to stay away from all gas stations. THIS WILL NOT WORK!
>:One day will not make an impact on the outrageous prices we are paying
>:for gas and the oil companies are laughing throughout their board rooms.
>:Starting April 11th we will strategically target the BIG oil companies
>:for ONE WEEK. Please do not buy gas at the stations on the following
>dates
>:listed below:
>:
>:CHEVRON----------------------------------April 18th through April 25th
>:EXON-------------------------------------April 25th through May 2nd
>:SHELL------------------------------------May 2nd through May 9th
>:76---------------------------------------May 9th through May 16th
>:Texaco-----------------------------------May 16th through May 23rd
>:
>:This will work if we all pull together .There is a strong perception
>:in northern California by the oil companies that consumers will pay
>:whatever the market will bear.
>:These weekly boycotts may be required on a continuous basis until the
>:message is clear that the unfair and unjustified high prices will not
>be
>:tolerated by the consumer.
>:Please forward this message to friends, family members, and anyone else
>:who will support this effort via email, fax, word of mouth etc
>:
>:--
>:Thanks
>:Mike Z
>:
>:Please remove the *** front and back to reply
>:
>:
>: