Will gas boycott sizzle or fizzle?

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By ADAM WILMOTH
The Oklahoman
Wednesday, May 09, 2007

A 40 percent increase in the price of gasoline in the past three months has led to a new flurry of an old suggestion on how to keep gasoline prices from soaring higher.

Unfortunately for consumers, most of the popular e-mailed recommendations oversimplify a complicated issue and ignore many economic principles.

One of the most popular e-mail versions tells consumers not to buy any gasoline on May 15. The petition claims that if everyone boycotts gasoline stations on the same day, "the oil companies would choke on their stockpiles," and that the protest would cost the industry more than $2.2 billion.

The country's producers keep millions of barrels in reserves nationwide to prevent shortages occurring during times of peak gasoline usage. A successful boycott could potentially increase reserves for the day, but is unlikely to have a long-term effect because the consumers who avoid gasoline stations on the 15th probably will have to refill later in the week, University of Oklahoma economist Robert Dauffenbach said.

"Buyer strikes of a one-day duration, I have little confidence in," he said. "Buyer strikes of a month -- there you're talking. The problem is we all have to get to work somehow."

The e-mail suggests a similar effort in April 1997 caused gasoline prices to drop 30 cents a gallon overnight. Records from both AAA and the U.S. Energy Information Agency, however, show the price was relatively constant that month at about $1.18 a gallon.

Another popular e-mail urges consumers to boycott the world's largest oil company, ExxonMobil, for the rest of the year.

That effort has received nearly 100 percent participation in Oklahoma for many years (four Exxon- and Mobil-branded stations are in the state). Still, prices continue to climb. The problem with boycotting one brand is that stations buy fuel from suppliers who also sell to other brand stations.

The suppliers and producers all will get their money, regardless of which branded station they sell to. The people most likely to be hurt by such a boycott are the gasoline station owners, who are almost all local franchise owners, said Vance McSpadden, executive director of the Oklahoma Petroleum Marketers Association.

"You're not hurting the oil companies at all," McSpadden said.

Many factors affect fuel prices, but much of the issue centers on supply and demand. Supply increases are lagging demand in part because many of the world's largest fields have been tapped. Energy companies say environmental regulations also restrict supply by preventing companies from drilling in certain areas and by making it difficult for companies to build new or expanded refineries.

At the same time, demand continues to soar as more people worldwide are increasing their energy usage. Environmental groups blame inefficient vehicles and appliances for contributing to the problem.

In any event, the effort to calm soaring and fluctuating gasoline prices will require more than a mass e-mail movement among consumers.

"The problem is we're four years into high prices, and our usage of fuels continues higher and growing," Dauffenbach said. "It's only by really cutting back on usage are you going to hope to get lower gas prices."

(Distributed by Scripps Howard News Service, www.shns.com.)