I’ve just received a chain email, with the usual request to send it onto everyone you know. I have a pathological dislike of chain letters/email and won’t forward them on principle. But I thought the issue it raised was worth discussing. I have included the whole email below (I’m assuming I won’t be sued a la J K Rowling), if you wish to see the nuances.
The originators are attempting to find a way to get oil companies to reduce petrol prices, and the cunning plan is to get everyone to boycott two of the biggest name chains. That way, they argue, prices will have to be brought down, but we can still get our petrol.
What do you think? Leaving aside the dodgy chainmail maths, is this a sensible tactic? Is its stated goal (to reduce petrol prices in the UK to order of 69p a litre) a reasonable one? With our green hats on, should we even be trying to reduce petrol prices? I’m genuinely unsure.
Another question – the originators suggest we buy petrol from supermarkets etc. – I presume supermarkets get their petrol from oil companies. So could buying at (say) Tesco put money in (say) Esso’s pocket anyway? I don’t know.
The text:
See what you think and pass it on if you agree with it
We are hitting 108.9p a litre in some areas now, soon we will be faced with paying £1.10 a ltr.
Philip Hollsworth offered this good idea:
This makes MUCH MORE SENSE than the ‘don’t buy petrol on a certain day campaign that was going around last April or May! The oil companies just laughed at that because they knew we wouldn’t
continue to hurt ourselves by refusing to buy petrol. It was more of an inconvenience to us than it was a problem for them. BUT,whoever
thought of this idea, has come up with a plan that can really work.
Please read it and join in!
Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a litre is CHEAP, we need to take aggressive action to teach them that BUYERS control the marketplace not sellers. With the price of petrol going up more each day, we consumers need to take action. The only way we are going to see the price of petrol come down is if we hit someone in the pocket by not purchasing their Petrol! And we can do that WITHOUT hurting ourselves. Here’s the idea:
For the rest of this year DON’T purchase ANY petrol from the two biggest oil companies (which now are one), ESSO and BP.
If they are not selling any petrol, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit. But to have an impact we need to reach literally millions of Esso and BP petrol buyers. It’s really simple to do!!
Now, don’t wimp out at this point… keep reading and I’ll explain how simple it is to reach millions of people!!
I am sending this note to a lot of people. If each of you send it
to
at least ten more (30×10 = 300)... and those 300 send it to at
least ten more (300×10 = 3,000) ... and so on, by the time the
message reaches the sixth generation of people, we will have reached
over THREE MILLION consumers! If those three million get excited and
pass this on to ten friends each, then 30 million people will have been contacted! If it goes one level further, you guessed it… ..
THREE HUNDRED MILLION
PEOPLE!!!
Again, all You have to do is send this to 10 people. That’s all.(and not buy at ESSO/BP) How long would all that take? If each of us sends this email out to ten more people within one day of receipt, all 300 MILLION people could conceivably be contacted within the next 8days!!! Acting together we can make a difference. If this makes
sense to you, please pass this message on.
PLEASE HOLD OUT UNTIL THEY LOWER THEIR PRICES TO THE 69p a LITRE RANGE
It’s easy to make this happen. Just forward this email, and buy your petrol at Shell, Asda,Tesco, Sainsburys, Morrisons Jet etc. i.e. boycott BP and Esso.
Tax .
Richard – that’s maginficently monsyllabic, but not sure what you mean? I’m not clear if fuel tax is a flat rate, or percentage based like the VAT that’s also applied. If it’s percentage based, it doesn’t make any difference, does it? If it’s flat rate, it sets a minimum – but significantly less than current price.
This could have the opposite effect – if I was in one of the other companies and saw this happening (i.e. a rise in demand), I would put the prices up.
What Richard means is that the higher the oil price, the higher the absolute amount of tax the government receives, magnifying the price paid at the pumps.
I don’t think boycotting just one set of suppliers would work. What would happen is that everyone would go to the smaller suppliers who, faced with increased demand, would put their prices up, and so driving people back to the original suppliers.
The only way to force the prices down is is everyone bought less fuel from everywhere, so the suppliers would have to compete with one another to make their fuel attractive. Fuel is fuel – the only possible difference is price.
And the only way to buy less fuel is to think more carefully about when and why you take out your car, and to wonder if you can do the same journey by walking or some other means. I live in a rural area where public transport is sparse and cars are a boon. But it’s still 23 miles to (say) Norwich, which is a lot of miles, so if we have a trip to Norwich coming up, we try to do a lot of things in one trip, rather than making a series of separate trips.
This has been tried many times and it does not work. Why is simple.
Whether you buy today or tomorrow doesn’t matter. You need the same about of fuel over the course of a week. So if you don’t buy today, you’ll just buy tomorrow, or perhaps yesterday in preparation for not buying today. The oil companies aren’t going to look at a single day’s drop in sales and panic.
The only way to reduce oil prices is to permanently reduce demand.
Jeff – I think you missed the point in the rather rambling chain email, which was not to change your buying pattern, but to avoid buying from two specific suppliers (Esso & BP).
I’m also not totally persuaded by the economic argument Henry makes (if company X is selling more, they will put prices up), as the overall demand isn’t going up – in fact, arguably company X might be able to reduce prices as a result of higher sales (which enables them to nobble company Y which has less sales). (aka the Tesco nobble.)
However I do think there’s a fatal flaw in the cunning plan (which has a touch of the Baldrick about it) – forecourt petrol sales are a very small part of BP & Esso’s business and it’s probably a bit naive to think they would say ‘ooh, ooh, no one is buying petrol from us, let’s slash the price’...
Brian, the two specific suppliers bit is just a variation on the same theme. I did miss the larger issue, though.
As for the supply itself, I live in Memphis. We have a local refinery. All the gas sold in Memphis is refined at this one place, then pumped into delivery trucks with different corporate logos on the tanks. It’s all packaging.
The problem with this boycott model is that prices are high because demand exceeds supply. They can’t (or won’t) put more petrol into the system to sell at lower prices. So all this boycott does is shift demand to vendors whose supply is still set by overall demand, thus, as Henry says, allowing them to raise prices, since they have less fuel to sell to more people.
To make it work, the boycott would have to be a fluid system whereby every day you receive a list of locations selling the cheapest gas, and for that day, everyone only buys gas there. Tomorrow, a new list is delivered and everyone switches to the new cheapest suppliers. That would probably drive down prices, but it would require massive participation and coordination to make it work, and in the end, all that would happen is the suppliers would form an unoffical cartel to stabilize prices, because the underlying driving factor to all of this is that supplies can’t meet demand.
Oh, and oil prices are tied to dollars, and as the dollar falls, the price of oil goes up, and no amount of boycotting will affect that.