You may have received an e-mail encouraging you to boycott, for the next year, two major gasoline vendors (click for a sample), to help achieve lower gasoline prices.
It is an interesting idea—certainly better than the â€œdonâ€™t buy gas for one dayâ€ e-mails that have gone out—but it can't work, from an economics perspective.
There are two major factors affecting gasoline prices. The first is the price of crude oil. The second is demand on gasoline itself.
Currently, crude oil production worldwide is at or near a maximum, reserves are shrinking, and much of the oil obtained is less desirable (and more expensive) for use in gasoline production. In addition to decreasing supply, the rapid growth of industry and the middle class in China is rapidly increasing demand on crude oil worldwide. Crude oil prices are going to continue to increase until production increases significantly or demand decreases.
Then there is supply-and-demand for gasoline itself. Worldwide, refineries, which convert crude oil into gasoline and other petroleum products are typically operating 24/7. This means that gasoline production is at its maximum. Due to environmental and security issues, few, if any, communities are willing to allow refineries to be built in their areas, and refinery construction can't happen overnight in any case.
Do we really think that gasoline companies are inflating prices by 100%? They are making a profit, to be sure, but certainly not at that margin. (Ironically, considering the e-mail I received, our local Hess station—one company targeted by the boycott—is typically charges 10Â¢ per gallon less than its competition.)
If we are to reduce the price of gasoline, we must decrease the demand. This can be done via carpooling, using public transportation, and buying hybrid or elecric vehicles. (Another topic is why the hydrogen fuel-cell powered car is a bad idea, but I'll save that for another time.)
It is estimated that gasoline will have to stay consistently over $3.00/gallon before people will stop buying the worst offending SUVs (some of which get as few as 7â€“8 MPG) and get something more fuel-efficient. (Many SUVs do much better, and the average MPG for an SUV appears to be over 20 MPG. My thanks to Robert Hardman for correcting my original misstatement.) I'm ashamed that our minivan only gets 20 MPG around the city, but our choices were limited by the need for space for our 4 children and personal economics. If we did not have a daily need for a larger vehicle, we would not have bought one.
What we ought to be doing is forcing the government to make its fleet vehicle purchases electric-gasoline hybrids or straight electric, demanding increases in public transportation allocation, subsidizing hybrid vehicle purchases (and other energy-saving projects) through tax breaks, and building more nuclear plants—which the US has a near-perfect safety record in operating, and which do not contribute to global warming or other air pollution—to supplement or replace natural gas-, coal- and oil-fired plants.
Anyway, that's my typical more-than-2Â¢.
(Thanks to Maryjane Case for the topic suggestion.)