Boycott Watch
May 25, 2006
Exxon-Mobile, Hugo Chavez, Citgo and Why Gas Boycotts Don't Work
   Let's face a few facts. 1) Gas prices are high because of supply and demand. While supply has remained steady, China is raising world demand. 2) Everyone is upset at the higher gas prices. 3) The Boycott Watch oil survey reveals people are still filling up their tanks with gas, going on vacations are not trading in their big cars to buy Mini-Coopers.

   There have been boycott calls against Exxon-Mobile for high as prices. There are now boycott calls against Venezuelan oil because of Hugo Chaves. Let's face a few more facts that have appeared in other Boycott Watch articles, but this time let's do it point by point:
  1. The vast majority of gas stations are independently owned, so a gas boycott against a brand will not hurt oil companies as I will demonstrate below, it will only hurt the local station owner who may be your neighbor.
  2. Oil is fungible - there is no way to tell where the oil came from once it hits the storage tanks at the shipping terminal or refinery.
  3. If one oil (refining) company needs oil and another has a surplus for whatever reason including boycotts, they sell oil to the other company. No company will therefore have a glut of oil, or another a shortage. Oil is purchased on the basis of a single market demand total to fill the total Markey needs.
  4. Refined gas is transported via underground pipelines across the country, and even though it takes a few days for the actual gas to travel through the pipeline, the pipeline operators allow companies to take gas out of the pipeline the same day they put it in as a matter of convenience.
  5. Gasoline is stored in large tanks and the final formulation is done at the distribution or terminal when pumping gas from the massive tanks into delivery trucks.
  6. In many cases, the terminal operator may have a driver deliver gas to multiple branded retailers using the same driver but differently labeled trucks.
  7. There may be several businesses involved in getting gas to your car. The oil supplier, the tanker ship line, the dock workers, the refiner, the pipeline operator, the terminal operator, the trucking company with the tank trucks and the independent gas station owner.

   Considering these facts, a boycott against a gas brand will have zero effect on the overall gas market. We are dealing with supply and demand issues leading to high gas prices at the current time. There are, therefore, two possible solutions to the price problem. 1) Lower demand by not consuming as much gas as before, but that is not happening. 2) Increase supply. To that end, today, May 25, 2006, the US house voted to open oil exploration in ANWR, but even after such a bill passes, and with the situation one such bill will become law, it will take several years for the first drop of oil to hit the US. In the mean time, the US bars oil exploration off its shores, and Cuba announced it will explore for oil 50 miles from the shores of Florida. Boycott Watch asks this question: Who would you rather see drilling for oil off the coast of Florida? US companies that are accountable to the American people or Castro's Cuba which hosted nuclear missiles pointed at the US?

   To lower gas prices, the US can open ANWR and lift the ban on US off-shore exploration. There are environmental concerns regarding these exploration methods and some will say we are already facing an economic crisis which is worse than a potential environmental crisis. Now that you have the facts about why oil boycotts don't work and the basics of how gas distribution works, you can now decide for yourself what you think is the best way to address the supply and demand issues we face today.

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