Economics 101

Yesterday was the last straw. I received the umpteenth e-mail message urging me to boycott Exxon/Mobil for the next year in order to force it and all the other petroleum companies to reduce their prices. What really got me this time was that the message came from the director of our Justice, Peace and Ecology office. Don't get me wrong; I'm not a fan of Exxon/Mobil or any other oil company. I don't buy gas (petrol, benzina, whatever) from Exxon anyway because they don't have stations around here. It annoys me, however, that people are so blinded by consumerism that they blissfully ignore simple economics.

Here is how I responded to JPE brother:

First of all, this is not a new idea. This e-mail was sent around in 2002, 2003, 2004 and 2005. Did you notice any effect on gas prices those years? E-mail is not a very effective tool for starting boycotts. If every recipient of this e-mail joined the Exxon boycott, I doubt it would even notice the effect.

Secondly, let's say Exxon did notice a drop in sales. They might respond by lowering the price of their gas by a few cents so that it would be cheaper than BP, Conoco, Shell and all the other major companies. Will everyone continue to buy the more expensive gas? I doubt it. Furthermore, those who might have bought from other companies before the boycott would then start to buy from Exxon. Even if that did not happen, the other companies, now faced with greater demand, would have to find additional sources of gasoline. Exxon/Mobil would happily sell their surplus gasoline to these other companies. The net effect on Exxon would be negligible.

I agree that Exxon's executives are overpaid, as are the execs of almost all of America's corporations. I just don't think boycotting one company is going to change that. American cities have been designed to require the use of a car to do the most basic tasks, such as shopping, banking, etc. Public transportation has been downplayed in favor of more and larger roads. This problem has been fifty years or more in the making; there is no quick, easy solution to it. The only effective way to bring down energy costs is conservation. Drive less. Buy more fuel-efficient automobiles. Turn out unnecessary lights. Wear sweaters and turn down the thermostat in the winter. Use fans and turn up the thermostat in the summer. On the whole, I think our province wastes a lot of energy. Why should we complain about the high cost of gas when we share responsibility for raising it! We hurt ourselves by being wasteful, but we also hurt the poor, who can afford the increased cost of energy even less than we can.