Petrol prices

This landed in my inbox today. I wasn’t sure whether to laugh or cry. Read the spam and then I’ll explain.

We are hitting £108.9 a litre in some areas now, soon we will be faced with paying £1.10 a ltr. Philip Hollsworth offered this good idea:

This makes MUCH MORE SENSE than the ‘don’t buy petrol 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 petrol. 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 in!

Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a litre is CHEAP, we need to take aggressive action to teach them that BUYERS control the market place not sellers. With the price of petrol going up more each day, we consumers need to take action. The only way we are going to see the price of petrol come down is if we hit someone in the pocket by not purchasing their Petrol! And we can do that WITHOUT hurting ourselves. Here’s the idea:

For the rest of this year DON’T purchase
ANY petrol from the two biggest oil companies (which now are one), ESSO and BP.

If they are not selling any petrol, 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
Esso and BP petrol buyers. It’s really simple to do!!

Now, don’t wimp out at this point… keep reading and I’ll explain how simple it is to reach millions of people!!

PLEASE HOLD OUT UNTIL THEY LOWER THEIR PRICES TO THE 69p a LITRE RANGE

I am sending this note to a lot of people. If each of you send it to at least ten more (30 x 10 = 300)..

etc. etc. You know the style.

This might work if it weren’t for the following points:

  • The market for oil is global. The UK not buying petrol at all would not make a smidgen of difference. It’s literally and figuratively a drop in the ocean.
  • The consumer is not in control of what is effectively a monopoly product – there isn’t a substitute to petrol and so the price will stay high as people continue to buy it.
  • The price of petrol is dictated by the price of oil; the price of oil is driven by demand for oil. The demand for oil is not just through petrol but the market for oil derived and petrol dependent products… which is just about everything from plastics to vegetables.
  • Where do you think that Tesco, Morrisons etc get their petrol from? The same place most of the time that Esso/BP do. And the price that Esso pay for the oil is dictated by the wider market price. Boycotting Esso wont change the price they pay for the oil, so it wont change the price they sell it at.
  • Oil is a finite resource. Up until quite recently, discoveries of oil have been greater than consumption. However, there isn’t unlimited oil and some of it is very inaccessible. The ‘low effort’ oil is now almost used up and the ‘high effort’ oil is becoming more viable at this higher price. However, because oil is a finite resource, the supply will ‘peak’. This is predicted to be around 2010. After this, supply of oil will reduce and if demand stays the same, the price will rise. However, it is possible that the ‘peak’ is earlier than we expected, meaning that this is just the beginning of the price rises. The only action that will reduce the price (reducing demand) will decrease the supply as marginal oil fields cease to be financially viable.

The only way to deal with this is to wean ourselves off oil. And if I had a simple answer as to how to do that I wouldn’t be writing this blog, I’d be receiving a Nobel Prize.

Just one more thing – I agree that we shouldn’t buy from Esso, but that’s because of the companies human rights violations in Burma. Not buying from Esso wont change prices, but could put pressure on them to stop trading with a country with a terrible human rights record and a humanitarian disaster to deal with.

Ok. I’m off my soap box now. 🙂