A Questionable Proposition

Discussion in 'Et Cetera, Et Cetera' started by D_Thoraxis_Biggulp, Jun 1, 2008.

  1. D_Thoraxis_Biggulp

    D_Thoraxis_Biggulp New Member

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    We've all seen those chain e-mails claiming that, if we all buy no gas whatsoever on a certain date, that the oil companies will be forced to lower their prices the following day in order to fight the lowered demand. We also all know that that is bullshit. But I saw one the other day that I'd like to see picked apart. Ideally, it may be able to work, but an ideal situation is typically far out of reach.

    The idea is to buy only from the smaller oil companies and feed as little money as possible into Exxon and Mobil, the nations two largest oil companies. The rapid decline in demand would cause them to lower their prices to draw their customers back in, according to whoever came up with the idea. My thought, though, is that even if half of their customers boycott them, they'll simply raise their prices incrementally in order to maintain the same profit from their remaining customer base.

    It sounds to me like Economics 101 applied to a far more complex situation, but I know there are people here far more educated in economics than myself. So I want to hear some other takes on it.
     
  2. red7.5

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    Um, ExxonMobil is one oil company. One huge MF'er oil company.
     
  3. D_Thoraxis_Biggulp

    D_Thoraxis_Biggulp New Member

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    ... How the hell did I forget that they had merged?
     
  4. red7.5

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    Maybe you mentally blocked it because it was, and is, absolutely ridiculous for our government to sanction it's existence.
     
  5. unabear09

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    yeah....I already do this. I buy (unless I'm out somewhere else, which due to gas prices, I really don't leave the city anymore) gas from a station in front of the Walmart here called Murphy Oil. I think it is based somewhere in the Tn. Valley, or from another local gas station. They ALWAYS have the lowest gas prices in town
     
  6. HazelGod

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    Yep, the merger of the two largest oil corporations was one of those wonderful decisions that was permitted during the Clinton era of economic prosperity that folks love to wax nostalgic over... :rolleyes:
     
  7. B_jacknapier

    B_jacknapier New Member

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    It won't work because people like me won't put forth one iota of effort to let it.
     
  8. Elmer Gantry

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    The money isn't in the retailing, it's in the mining and refining and that all comes from the same hadnful of companies.

    As an example, look up how many actual refineries are in your area that supply the local market.
     
  9. Pecker

    Pecker Retired Moderator
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    So nobody buys gas for 24 hours.

    The oil companies shrug their shoulders and go to the beach for the day.

    The next day record amounts of gas are sold and the price climbs to new heights because of the sudden increase in demand.
     
  10. Elmer Gantry

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    And the price is being driven up by investment banks trying to bail themselves out of the MBS mess. For once, don't blame the oil companies.
     
  11. kalipygian

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    Exxon should be boycotted anyway, because, among other things, they still have not payed the punitive settlement from the Exxon-Valdez spill 20 years after.

    If an oil company sold the crude it produced at less than market, it would be bought by commodities traders and resold at market price.
     
  12. JustAsking

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    Oil companies don't set the price of crude oil. I think they make about $.04 on each gallon of gas. The rest is going to the middle east to fund terrorists.
     
  13. B_jacknapier

    B_jacknapier New Member

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    the government actually takes a fair chunk of change for each gallon, too
     
  14. Phil Ayesho

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    Look... competition does NOT lower prices...
    that is a myth.

    The only force that drive prices lower is when the consumer chooses to defer purchasing.

    If enough folks don't buy new cars... the car companies are forced to lower pricing to try and spur sales...

    Its not the competition... its consumers NOT buying.



    However... when the commodity is a staple that you do not have a choice about buying... when you HAVE to buy... competition simply results in price fixing.

    In this country you can not keep a job and buy groceries without buying gas...
    Because you can not defer the purchase of gas... they can charge whatever they please... the only thing holding gas prices down right now is the overall negative impact on the economy of raising them too fast...


    That Oild companies fix the price of gas can easily be proved by comparing the price of gas in areas that HAVE other options for commuters, like Chicago, to areas that offer no alternative to driving to work, Like L.A.

    And whaddaya know? gas is ALWAYS less expensive in Chicago than in L.A.
    Despite the fact that LA has its OWN oilfields and one of the largest refineries in North America and has a harbor where Alaskan crude ships directly in...

    Compared to inland Chicago which has to have fuel shipped in...



    The founding Fathers understood this dynamic... the tendency for the prices of staples to be manipulated.
    That is why they gave the Federal government the power to REGULATE commerce.

    Used to be power utilities and gas companies had oversight and had to prove a need to raise prices.

    Today its like the robber-baron days all over again, except the company store is now Citibank.

    The Deregualtion movement Started in the Reagan era... but it did not really start to gather steam until the Republicans took both congressional power halfway thru the Clinton presidency.


    Its stupid for people to think that the "market" will take care of itself... or of their future.
    The "market" is nothing but rich and powerful men acting in their own self interest.

    What Made America what it became was when, back in the early 1900, congress started to enact severe regulation on corporations.
    A 5 day work week, an 8 hour day, time and a half for overtime.... the legalization of labor unions, the SEC and a host of other regulatory acts were what created the "American Dream" of the later half of the 20th century.

    The unrestrained avarice of the top 2% is NOT the government we were intended to have.


    Stop believing in spin.
    Educate yourselves as to what is being done to you.

    And agitate for change.
     
  15. HazelGod

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    Bingo. This is what the fools who hold up the red herring of capitalism / socialism dichotomy aren't understanding. Naked, unchecked capitalism invariably tends toward consolidation of market power and control into the hands of a self-interested few at the expense of the society supporting it. Pure socialism does exactly the same, only the few in power are the public officials rather than the corporate board executives.

    In either case, the actual people producing and consuming get the shaft.

    The answer isn't an either/or scenario...a balance of both is required. Personally, I believe mostly in a free-market economy with appropriate regulatory controls in place...particularly in the necessary commodity sectors such as those Phil points out.

    The policies of deregulation that have been underway for the past 30 or so years have almost all resulted in sharp price increases for the customers...the exact opposite of the projections laid out to Congress to justify deregulation. It's time to reign the energy and utility industries back in...they've sufficiently demonstrated they can't be trusted to conduct their businesses with deference for the people who support and rely on them.
     
  16. D_Thoraxis_Biggulp

    D_Thoraxis_Biggulp New Member

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    The local news showed a breakdown of pricing the other day. The cost of the oil from the refinery, taxes and transportation made up about 90% of price of gas. So, even if this were to work, the stores could shave off no more than 10%. The refineries will still be selling the same amount, since the smaller companies are buying more, and as such won't need to change their prices.
     
  17. Qua

    Qua
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    I might add that more than half of all oil-based securities are part of mutual funds and retirement funds (56% I believe?). Since it's a fairly safe investment in the near (our lifetime) term, it's a good choice for long term retirement planning with a very good return/risk ratio. The point being, these "record oil profits," while obviously favoring a few executives (who I want to say take 5-7%) since the number of shares per investor is much higher, are supporting America's retirement planing.
     
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