Labels: technology

The following is a conversation I have via email earlier this week. I was copied in a long list with some other folks. The original email was sent from what I suspect to be a mom and pop trucking company. Their emails will be presented in ALL CAPS (Because thats how I got them). The text of the missives has not been altered.

To random list of email addresses: GAS OUT............... THE OIL INDUSTRY IS OUT OF CONTROL THIS IS YOUR CHANCE TO DO SOMETHING ELSE. PLEASE PARTICIPATE AND SPREAD THE WORD. DO NOT BUY ANY KIND OF FUEL ON MAY 15TH. THIS IS A GAS OUT DAY SPREAD THE WORD ANY WAY YOU CAN, THIS WILL CAUSE A PINCH IN THE PROFITS OF THE OIL INDUSTY. THANKS

My Reply: In what way is the oil industry out of control and how does a single day of reduced profits followed by a day of expanded profits affect the oil industry? -Max

Their Response: WELL I GUESS YOU DO NOT PURCHASE 500 GALLONS OF FUEL EVERY OTHER DAY, AND IF THINK ABOUT IT FILL UP THE DAY BEFORE AND THEN AGAIN 4 DAYS LATER, DO YOU EVER COUNT THE AMOUNT OF SEMI TRUCKS ON THE ROAD??? NOW THINK ABOUT THAT ONE THE PRICE OF UNLEADED GAS IS NOW 4.33 PER GALLON IN SAN FRANCISCO I DON’T WANT TO PAY THAT MAX DO YOU??? IT IS A WAY TO SHOW WE ARE NOT HAPPY. IF YOU DO NOT WANT TO PARTICIPATE THAT IS COOL, THANKS FOR READING THE MEMO.

My Reply: Yipes, 500 Gallons. That is a lot of fuel, indeed. I don't spend nearly that much, about $250.00 or so a week for the maintenance truck fleet. But I'm still not clear on how the oil industry is out of control or how a one day stoppage of consumption will affect them.

I own a property management company with a construction and maintenance unit, so I am quite empathetic to the notion of rising prices on key business costs. Cement for example has quadrupled in price in the last two years. Copper pipes have doubled (or tripled I've lost track).Copper, Cement, and Fuel are all the same in the sense that all three are currently in high demand world wide. The higher the demand the higher pressure on prices for those goods. So I would think that its only natural that pipe makers, cement makers, and fuel makers charge more for their products when they are in high demand (and relatively low supply). To suggest otherwise would be to say I shouldn't raise rents on my apartments when they are in high demand. (or conversely, to lower them when they are in low demand).

Increased costs are certainly a hindrance to business (especially us small business owners) but my business responds to these increased costs by passing the cost onto the consumer. If the customer is unwilling to pay those increased costs then my business is simply not profitable and I should look to get out of it. I don't believe there is any natural right that I have to demand that someone be forced to reduce their profits for the sake of preserving mine. That would be like saying that I'm more important than anyone else (or at least I'm more important than my suppliers)

On the issue of fuel specifically, Fuel costs are indeed high but It seems the causes have little to do with so called "profiteering" on the part of oil companies. Rather it seems that increased world wide demand, a general shortage of sweet crude supply, increased risks associated with the area's of the world richest in sweet crude, and an oppressive fuel tax scheme are to blame.

If we apply your short term boycott strategy then I think your best bet would be to refuse to pay the federal gas tax portion of your next fuel bill. Really let those Fed's know your fed up. (hah, a pun! I kill me). Of course not paying taxes is a great way to get yourself noticed by the wrong people. However, in a few years my business will be indeed not paying that Federal Fuel Tax, and getting away with it. Plans have already been set in our company to convert our fleet to electric. Not only are we saving on fuel and not paying the gas tax, we get another important benefit. We get a PR bump by being super earth friendly. While tree-hugging isn't my cup of tea, it is popular these days, we might as well cash in. In fact We'll probably find some government grant program to partially compensate for the out of pocket cost for the whole endeavor. Perhaps all electric isn't viable for you, but plug-in hybrid technology is (works on trains).

On the issue of your proposed boycott, I wonder... It seems that the stakeholder that would be the most cost affected is not the intended target of Big Oil but rather the station owner/operator. While companies like Exxon-Moble do operate their own stores many stores are chains or locally owned and are not oil producers themselves. Will this boycott not hurt them more than big oil? A one day stoppage of purchases will affect them more profoundly than their fuel provider who probably gets paid on a weekly, not daily basis. The oil producer isn't likely to notice even a blip in profits unless you go to a "No Gas Week".

Further, all retailers (regardless of ownership) are regulated very tightly on how much they can mark up the fuel. Which brings up two points. 1.) The retailer of gas really doesn't care if you buy gas at all. The big profit maker for the retailer is the sunglasses and junkfood sales, where the markups are unregulated and customarily huge. 2.) If all gas retail is so harshly regulated then one key reason why fuel is so expensive is that retailers are not free to compete. Which is a key reason you'll never see a "sale" on gas. Perhaps then a better direction for your outrage is towards your congressman.

I do want to participate. I'm all about letting those who wrong us feel our discomfort. But is No-Gas Day the way to go? Perhaps May 15th should be Write-Your-Congressmen-About-The-Oppressive-Fuel-Tax-And-Harsh-Regulatory-Environment-Day. What do you think?
-Max

That was yesterday, I'm still waiting to hear back.

Labels: big government, economics, opinion