Draft SUV Drivers First!  

rm_VoodooGuru1 49M
2116 posts
4/26/2006 12:16 am

Last Read:
5/1/2006 4:12 am

Draft SUV Drivers First!

I was astonished and appalled watching a segment on Wolf Blitzer today; it wasn't so much the subject of the news story, but the fact that the CNN producers thought it was something viewers needed to be aware of. It was all about the e-chain letter going around about boycotting ExxonMobil. kuriousqt73 has a copy of it on her blog if you haven't seen it.

This email contends that boycotting the largest energy company in the world will force it to drop the price of petrol to its "natural" float of US$1.30 per US gallon. Wolf comes on and with the help of other "experts" explains that the letter is a hoax, and the boycott won't work.

CNN didn't bother to say why it won't work, only that "experts" had assured them that it won't. This is one of the things that I hate about the news channels - they tell you "This is how it is!" but they never tell you why it is. I'm sure there are still people who think a boycott might hurt ExxonMobil, even if it won't reduce the price of gas; those people are wrong, and this is why....

Gasoline is a competitive good, and its price elasticity function has a negative first derivative, while its second derivative is positive! How the fuck is a boycott going to work with a commodity that has these attributes? How can you have any pudding if you don't eat your meat?!?

Er... um... that is to say....

Let's assume for a moment that all EM stations carry nothing but EM fuel, and that no EM fuel is distributed to any non-EM station. This isn't true, of course, but let's pretend it is. Let's further assume that all Americans (sorry Canada) boycott EM; EM sells no fuel on the first day of the boycott (B+0).

Now, we aren't going to give up our SUVs for little pussy hybrid cars, so we'll still be buying the same amount of petrol; aggregate demand does not change!

So B+0, B+1, B+2, EM does indeed take a hit from selling no fuel. Sometime around B+3, they will react to this by lowering prices, but not to $1.30. Empirical data shows that 80% of buyers will react to a price cut of 10%, EM has a shitload of MBA dumb bunnies working for them, so they know this too. Your corner EM fill-up station now has gas for $2.70 per gallon, while everyone else is selling for $3.00.

You may be the crunchiest granola-girl or angriest anti-globalization suburban hippy, but at this price difference you are going to be all, "Fuck this boycott bullshit! That's cheaper than I can buy on the rez... let someone richer than me carry on the boycott. Filler up Mr. MobilMan!" Throw some patchouli oil on your armpits, then you drive off in your VW bus to the next protest.

By B+9, gas is back to $3.00 everywhere, everyone is suffering from protest fatigue, and no one's going to mount another boycott when the first one died in a week.

Look, I'm not wealthy. Three dollar petrol hurts me as much as it hurts you. But I'm not letting it bother me, in fact in many ways I'm glad for it. For several years, energy economist's models have shown $3.00 to be the approximate price trigger that forces change in behaviour, changes that will reduce aggregate demand along with so many other profound changes.

But I'll save that for another post, eh? You must be tired of reading this boring rant.

cuteNEway 41F

4/26/2006 4:43 am

Oh are you done?

rm_VoodooGuru1 replies on 4/26/2006 9:51 am:
Yeah, heh? Riding crop privies are suspended.

rm_rsp54 58F
531 posts
4/26/2006 5:15 am

Oh yes....said like an evil economist. Actually, you did an excellent job of explaining it to me.

Europeans have been paying high prices for year;that's why they drive little bitty cars and use public transportation. The only people who use it here in ne pa. are the seniors who ride for free!!! Will we learn when it is too late??

rm_VoodooGuru1 replies on 4/28/2006 7:38 am:
Thanks, rsp.

A lot of those tiny cars are fun to drive, and many run on the new generation of diesel. Diesel never caught on here, in part because of lousy product.

rm_1hotwahine 63F
21091 posts
4/26/2006 10:06 am

Weren't you just lecturing us on this?

So basically only a slower decrease in demand, sustained over the long haul could even maybe initiate that oh so elusive leftward shift of a product with such complex elasticity properties.

Yeah, we get it.

Yeah, I'm still [blog 1hotwahine]

rm_VoodooGuru1 replies on 4/28/2006 7:40 am:
Good girl! You get a gold star.

MissAnnThrope 56F
11488 posts
4/26/2006 11:39 am

This boycott letter has been circulating for at least a year now. Look at how well the boycott has been working.

Now, let's look at the other side of the equation. Everyone boycotts Exxon and Mobil. They suddenly have a surplus of product. Everyone else is suffering shortages, as they can't keep up production to meet demand. Where are they going to go for their supplies? To the companies that actually still have the product. So, Exxon and Mobil still profit and everyone else pays higher prices, as they can charge whatever they want to the companies that aren't being boycotted.

They only way for an oil boycott to work would be for everyone to stop driving. Get out the bicycles if you want an oil boycott to work.

rm_VoodooGuru1 replies on 4/28/2006 7:44 am:
Yeah, that's what's likely to happen if everyone actually did hold out on a boycott, which they wouldn't... I mean, 31% of us still like Bush for example. EM would switch to the wholesale market, like Unical.

kuriousqt73 43F

4/27/2006 4:05 pm

If I didnt work an hour away from home and have such a crazy schedule I would ride bike/rollerblade to work. I know that I will not be doing much traveling this summer thats for sure. I will spend quality time at home with my daughter.

rm_VoodooGuru1 replies on 4/28/2006 7:47 am:
Yah, the park... the beach isn't too far from you either, is it?

demonicsexkitten 41F
10671 posts
4/28/2006 6:51 pm

i read something recently... i believe it said if everybody cut their gasoline use by 3% it will effect a change. but that the likelihood of that happening is slim to none. might hvae been on protonicman's blog... hmm. or in email somewhere. no idea. anyhow!!

My "environmental improvement" project involves getting myself a job in the city in which i live. (well: even just the STATE in which i live is a start). Then i'll have access to public transportation and/or bike and/or walk. save gas $, wear and tear on my car, and a bit of the environment too. well... one person doesn't make much difference. but it's a start.

*goes off to apply for jobs*

rm_VoodooGuru1 replies on 5/1/2006 4:14 am:
Im not familiar with this 3% study, but most people could cut 3% just by changing the way they drive.

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