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I thought some people would like to read this. Seems like an interesting idea. Can anyone find any flaws with this idea?

Dear friends & family,

I hear we are going to hit close to $3.00 a gallon by the summer.
Want gasoline prices to come down? We need to take some intelligent, united action. Phillip Hollsworth, offered this good idea: This makes MUCH MORE SENSE than the "don't buy gas 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 gas. 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 with us!

By now you're probably thinking gasoline priced at about $1.50 is super cheap. Me too! It is currently $1.77 for regular unleaded gas in Riverwoods, IL. We all know that we're being screwed by the oil companies. Does everyone remember how they drove up the prices way past a dollar and got the gas prices to where they wanted them, claiming there was a shortage of oil. Well, there isn't any shortage now, and the oil is more abundant than it was 35 years ago when the price of a gallon of gas was 29 cents!!!

Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a gallon of gas is CHEAP at $1.50- $1.75, we need to take aggressive action to teach them that BUYERS control the marketplace....not sellers. With the price of gasoline going up more each day, we consumers need to take action. The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing their gas! And we can do that WITHOUT hurting ourselves. How? Since we all rely on our cars, we can't just stop buying gas. But we CAN have an impact on gas prices if we all
act together to force a price war.

Here's the idea: For the rest of this year, DON'T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL. If they are not selling any gas, 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 Exxon and Mobil gas buyers. It's really simple to do!! Now, don't whimp out on me at this point...keep reading and I'll explain how simple it is to reach millions of people!! I am sending this note to at least thirty people. If each of you send it to at least ten more (30 x 10 = 300) ... and those 300 send it to at least ten more (300 x 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 (If you don't understand how we can reach 300 million and all you have to do is send this to 10 people... Well, let's face it, you just aren't a mathematician. But I am .. so trust me on this one.)

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 8 days!!! I'll bet you I didn't think you and I had that much potential, did you! Acting together Sounds good to me !! 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 $1.30 OR LESS RANGE AND KEEP THEM DOWN. THIS CAN REALLY WORK!!!!!!!

PLEASE take a few minutes and pass this on to everyone you know!! If you can't e-mail it to at least ten people, please print out a
bunch of copies and hand it out to your family and friends!!

Thank you very much!

Tom Paxton
 

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This is pointless and not a new idea.

In most (perhaps all) markets not every major company has a refinery operation, in this case they buy gas from each other refineries and add their own addative packages.

In L.A. (a huge market) I think the only refineries are Arco & Shell, if you buy as from a Mobil station (we don't have Exxon) it's coming from a Shell or Arco refinery.

Same thing in another city might have an ExxonMobil & a Chevron refinery, even if you buy your gas from Shell or Ammoco you could be getting gas from the ExxonMobil refinery.

The only way to lower the price of gas is to reduce our total consuption as a society. That means less 12Mpg SUVs on the road and more 45+Mpg hybrid autos. Using more mass transit is also a solution but not as practical as buying more fuel efficient vehicles.
 

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Excellent points raitchison!! Pointless efforts by under-educated people... it's basically a HUGE internet chain letter... (hope i didn't offend anyone with this post)
 

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High gas prices are here to stay so get ready for them. The only thing we can do is hope for an alternative fuel method to come in the pipeline and the right administration to implement it. Bush can talk all he wants about Hydrogen Fuel Cell powered cars but as long as he is in the oil companies pockets (just like every other politician) you can forget it. There's just too much money in oil.
 

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EightO2dot11 said:
raitchison, I think Chevron has a refinery in El Segendo?
I dunno I thought that was the Shell one. I think Arco/BP has the one by the 710 near the LBC.

Either way there can't be more than 3 and we have in the L.A. Area

Shell
Chevron
Mobil
Exxon (I guess these are coming back)
76
Arco
Texaco

Smaller chains
Thrifty
Alliance
USA
Ultramar

Plus a bunch more independents and operations like Costco
 

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raitchison said:
The only way to lower the price of gas is to reduce our total consuption as a society. That means less 12Mpg SUVs on the road and more 45+Mpg hybrid autos. Using more mass transit is also a solution but not as practical as buying more fuel efficient vehicles.
This is completely wrong. It is the exact opposite. Every other country in the world has high gas prices because the damand for gas is down. The vehicles in foreign countries on average get better gas mileage than the average vehicle in the U.S. so less gas is needed and cost goes up.

It is simple economics. If demand is low, cost is high. If demand is high, cost is low. This is all with exception of a shortage, which we know there is not. Believe it or not, gas guzzlers are saving you money at the gas pump every day. Since they need more gas, more gas has to be supplied. The more gas demanded by them, the less gas prices are. Think of it as mass production, the more products you produce the less profit you need to make off of each product to make your work worth the profit.

Example (Crude but effective): You make a widget that is very useful. You figure that for your time and for the things you needed to make this widget, you will charge $1000 for a person to buy one and the total parts cost (not including reuseable tools) is $100. 3 people buy one of these widgets at $1000 a piece and after the 3rd widget you realize that you spent half the time making the 3rd one than you did the first one. To broaden your market and get more people to buy, you lower the price to $800 because you can make them faster now and you will still make a sizeable profit. Eventually you are selling these widget for $150 a piece, have a website, a small office, and 3 employees and you are making a sh!t load of money because you are selling a lot more product.

Demand goes up, supply goes up, price goes down.

Gas prices have been rising because of three major reasons: 1. Companies have cut down on their production of gas to raise prices. 2. Cars are becoming more fuel efficent so less gas is needed, on average. 3. Inflation, as time goes by, price goes up. (You can thank Bill Clinton for the last few years of inflation since he raised the minimum wage more than $1.00 an hour during his presidency.)
 

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mnemonicj said:
This is completely wrong. It is the exact opposite. Every other country in the world has high gas prices because the damand for gas is down. The vehicles in foreign countries on average get better gas mileage than the average vehicle in the U.S. so less gas is needed and cost goes up.
That's contrary to the fundamental economic principle of supply and demand. When there is an over-supply and reduced demand, price goes down. Not up. The only exception to this rule is where demand has dropped below a level necessary for economies of scale, which does not apply to the case of gasoline usage in Europe.

It is my understanding that many countries have outrageously high gasoline prices because of high taxes in the industry.

mnemonicj said:
It is simple economics. If demand is low, cost is high. If demand is high, cost is low.
[/qutote]

This is false. Incresased demand drives up price.

mnemonicj said:
This is all with exception of a shortage, which we know there is not. Believe it or not, gas guzzlers are saving you money at the gas pump every day. Since they need more gas, more gas has to be supplied. The more gas demanded by them, the less gas prices are. Think of it as mass production, the more products you produce the less profit you need to make off of each product to make your work worth the profit.
You managed to graze the concept of "economies of scale". Gasoline production and distribution is far beyond what's needed for economies of scale.
 

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mnemonicj said:
This is completely wrong. It is the exact opposite. Every other country in the world has high gas prices because the damand for gas is down. The vehicles in foreign countries on average get better gas mileage than the average vehicle in the U.S. so less gas is needed and cost goes up.
I disagree, in most other countries the gas prices are high because of extremely steep fuel taxes, which is also why cars in other countries are more fuel efficient, if you were paying more than $5 per gallon for gas a 50+Mpg TDI would sound pretty good, even if it had only 60Hp. To compare retail gasoline prices in the US to other countries is completely meaningless, you need to compare the price with taxes excluded or compare the price of wholesale crude.

OPEC controls output to regulate prices, refiners control prodcution to control prices, if demand were cut such that the refiners had an excess capacity the price would (and does) absolutely go down so the refiners can continue to operate at peak efficiency.
 

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At least all us Mazda 3 owners aren't driving gas-guzzling 20+ gallon-capacity SUV's :lol: Even better, we only need 87 octane to run our cars which is, of course, cheaper than 89 or 91 octane.

As for this chain letter, I think this is like the seventh or eighth time I've seen it. Not buying the gas from one, two, three, etc. of the big gasoline-providing giants isn't going to hurt them nor is it going to force them lower their prices. Because they know that eventually, you'll need to feul up and where else are you going to go? Can you make your own gasoline?

I live about half an hour away from two oil refinerys for Chevron and Shell. And I know that distance, relative to the refinery, doesn't determine the price of the gasoline. It's supply and demand and Bay Area Californian's get some quickly rising and falling gas prices during the year. The worse places I've seen for gasoline prices are in San Francisco and in some busy suburbs that don't have a lot of convient gasoline stations. Californian's, in general, have it worse for gasoline prices because the cost of "oxygenates" and other "cleaner burning additives" get booted to the customer. I believe the other people here are right in when they say that gasoline is more costly in other countries because their feul is heavily "taxed".

The only way I can see gas prices go down is if there is a over-supply (following the supply and demand principals) on a scale which would warrent the gasoline corporations to "encourage" people to buy their gas. But the only way I can see that is if people started buying a lot, and I mean A LOT of alternative feuled vehicles, in a short amount of time (like in a couple of years to not give the gasoline corporations time to adjust). So far, there aren't many of the non-gasoline cars out there. I've seen pure-electric, bio-diesel (runs on recycled frying oil), Hydrogen-feul, and natural gas burning vehicles. But car manufacturers aren't making many if any of these alternate feuled vehicles. And even if they do, not many people care enough to go out and buy one. Why should they when their current car/truck/SUV/etc. does what they need?

-my 2 cents,
 

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LeeLee said:
mnemonicj said:
This is completely wrong. It is the exact opposite. Every other country in the world has high gas prices because the damand for gas is down. The vehicles in foreign countries on average get better gas mileage than the average vehicle in the U.S. so less gas is needed and cost goes up.
That's contrary to the fundamental economic principle of supply and demand. When there is an over-supply and reduced demand, price goes down. Not up. The only exception to this rule is where demand has dropped below a level necessary for economies of scale, which does not apply to the case of gasoline usage in Europe.

It is my understanding that many countries have outrageously high gasoline prices because of high taxes in the industry.

mnemonicj said:
It is simple economics. If demand is low, cost is high. If demand is high, cost is low.
[/qutote]

This is false. Incresased demand drives up price.

mnemonicj said:
This is all with exception of a shortage, which we know there is not. Believe it or not, gas guzzlers are saving you money at the gas pump every day. Since they need more gas, more gas has to be supplied. The more gas demanded by them, the less gas prices are. Think of it as mass production, the more products you produce the less profit you need to make off of each product to make your work worth the profit.
You managed to graze the concept of "economies of scale". Gasoline production and distribution is far beyond what's needed for economies of scale.

This thread has made an economics student happy since I'm not taking any econ classes this quarter. And yeah LeeLee is right on the money here.
 

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Lee Lee is right on here.

mnemonicj: the principle here is supply AND demand. Not just demand. Economies of Scale (your widget example) simply does not apply because of the amount of gasoline refined is so huge

As raitchison mentioned the reason gas prices are so high in Europe is because of taxation. The reason the taxes are high is because governments want people to drive cars that have low fuel comsumption and low emmissions. Now, before anyone gets on a kick about governemnt forcing people to do this and that. Remember we're talking about democracies here. Taxation is proven to be an effective deterent. Also, there is an extra charge in the UK based on the car's fuel econony - not sure if its a one off or an annual fee though.

And I think I saw the 'don't buy gas on Friday' e-mail for the first time about 10 years ago.

And we can thank Bill Clinton for being the first President in 25 years not require more fuel efficient vehicles.
 

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LeeLee said:
mnemonicj said:
This is completely wrong. It is the exact opposite. Every other country in the world has high gas prices because the damand for gas is down. The vehicles in foreign countries on average get better gas mileage than the average vehicle in the U.S. so less gas is needed and cost goes up.
That's contrary to the fundamental economic principle of supply and demand. When there is an over-supply and reduced demand, price goes down. Not up. The only exception to this rule is where demand has dropped below a level necessary for economies of scale, which does not apply to the case of gasoline usage in Europe.

It is my understanding that many countries have outrageously high gasoline prices because of high taxes in the industry.

mnemonicj said:
It is simple economics. If demand is low, cost is high. If demand is high, cost is low.
This is false. Incresased demand drives up price.

mnemonicj said:
This is all with exception of a shortage, which we know there is not. Believe it or not, gas guzzlers are saving you money at the gas pump every day. Since they need more gas, more gas has to be supplied. The more gas demanded by them, the less gas prices are. Think of it as mass production, the more products you produce the less profit you need to make off of each product to make your work worth the profit.
You managed to graze the concept of "economies of scale". Gasoline production and distribution is far beyond what's needed for economies of scale.
Right now there is an over-supply, that is why prices are lower and that is why OPEC can afford to cut production and raise prices without hurting demand too much and not only making more profit, but more money total. If everyone buys a hybrid engine vehicle and demand goes down, there is another over-supply, so OPEC cuts production again and raises prices again because now that everyone is using less gas, everyone can afford to pay more for the gas that they use. If you use 20 gallons a week at $2 a gallon, then you can afford to spend $4 a gallon if you only use 10 gallons a week.

Increase demand only drives up price when demand is greater than supply. If supply is greater than demand, which happened a few years ago, then prices go down (I got gas for $0.68 a gallon 4 years ago). OPEC is raising prices on gas and lower production because we are buying more fuel efficent vehicles. It is more expensive to make less product because profit goes down if supply goes down unless prices go up.

No matter how hard someone tries to convince me, I will still believe that every Hummer H2 on the road is saving me money on gas until there is a gas shortage.
 

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mnemonicj said:
No matter how hard someone tries to convince me, I will still believe that every Hummer H2 on the road is saving me money on gas until there is a gas shortage.

About 200 million tons of gasoline are produced every year. If demand dropped 10% that's still 180 million tons. This is way above threshhold for Economies of Scale.

But, it's a free country. If you want people to think you are a complete moron, keep on saying things like that.
 

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AK/47 said:
mnemonicj said:
No matter how hard someone tries to convince me, I will still believe that every Hummer H2 on the road is saving me money on gas until there is a gas shortage.

About 200 million tons of gasoline are produced every year. That's a shit load. If demand dropped 10% thats still 180 million tons. This is way above threshhold for Economies of Scale.

But, it's a free country, so if you want people to think you are a complete moron, keep on saying thins like that.
Go on and insult me if it makes you feel better about yourself, but if everyone had a Mazda3 and got about 27 miles to the gallon do you really think that gas would cost $1.77 a gallon? I think it would be more like $3.00 a gallon already...
 

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mnemonicj said:
Go on and insult me if it makes you feel better about yourself, but if everyone had a Mazda3 and got about 27 miles to the gallon do you really think that gas would cost $1.77 a gallon? I think it would be more like $3.00 a gallon already...
Yes it would. If the supply is constant and demand goes down, the prices go down.
Low supply + high demand = high prices.
High supply + low demand = low prices

Here's something to help you figure this out...

http://www.bized.ac.uk/stafsup/options/supply/interactive_markets_3.htm
 

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mnemonicj said:
Right now there is an over-supply, that is why prices are lower and that is why OPEC can afford to cut production and raise prices without hurting demand too much and not only making more profit, but more money total.
Prices are not lower. Gasoline prices just increased by 7 cents in the last few weeks. Also, the demand for gasoline in the US is fairly inelastic within a reasonable price range because gasoline is more of a necessity than a discretionary consumption. OPEC knows this and they adjust their production and price schedules accordingly.

mnemonicj said:
If everyone buys a hybrid engine vehicle and demand goes down, there is another over-supply, so OPEC cuts production again and raises prices again because now that everyone is using less gas, everyone can afford to pay more for the gas that they use. If you use 20 gallons a week at $2 a gallon, then you can afford to spend $4 a gallon if you only use 10 gallons a week.
That is not going to happen, because OPEC isn't the only major supplier of oil.

mnemonicj said:
Increase demand only drives up price when demand is greater than supply. If supply is greater than demand, which it is right now, then prices go down. OPEC is raising prices on gas and lower production because we are buying more fuel efficent vehicles. It is more expensive to make less product because profit goes down if supply goes down unless prices go up.
Absolutely not, if supply is greater than demand, prices will be set artificially low. As demand increases, price will start to increase as the supply surplus is reduced.

Your flawed reasoning is due to the fact that you can't seem to separate the effects of supply/demand, elasticity, economics of scale, and oligopoly.

mnemonicj said:
No matter how hard someone tries to convince me, I will still believe that every Hummer H2 on the road is saving me money on gas until there is a gas shortage.
I remember when gas was 89 cents a gallon. It wasn't that long ago. No H2s on the road back then...
 
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