Consumer Energy Report is now Energy Trends Insider -- Read More »

By Robert Rapier on May 17, 2007 with no responses

Gas Boycott Post Mortem

Well, let’s see what effect the gas boycott of 2007 has had. If you recall, on May 15th you weren’t supposed to buy gasoline, and this would cause gas prices to drop:

“Do not buy gas on May 15. In April 1997, there was a ‘gas out’ conducted nationwide in protest of gas prices. Gasoline dropped 30 cents a gallon overnight. … There are 73,000,000-plus Americans currently on the Internet network, and the average car takes about $30 to $50 to fill up. If all users did not go to the pump on the 15th, it would take $2,292,000,000 out of the rich oil company’s pockets for just one day. So please do not go to the gas station on May 15, and let’s try to put a dent in the Middle Eastern oil industry for at least one day.”

Let’s take a look at how the gasoline market reacted. Below are the closing prices for June gasoline on the NYMEX starting on May 14th:

May 14 $2.30
May 15 $2.30
May 16 $2.34
May 17 $2.42

I don’t think that’s what the organizers had in mind. Anyone seeing your local prices falling?

If you really want to impact gasoline prices, you have to cut demand. You must actually cut your consumption. Instead of not filling up for a day, ride your bike to work or take public transportation during the next boycott. Those are measures that actually reduce demand, and will affect prices. But that’s too hard or inconvenient, isn’t it? We want to hold on to solutions like boycotting Shell, which will bring them to their knees. Do people really have such a poor understanding of supply and demand?

Currently, the gasoline markets are being driven by low gasoline inventories (supply) plus higher demand than a year ago. Those two factors equal higher prices. To lower prices you have to increase supply or lower demand. Deferring your purchases for a day will accomplish neither.