BCT Editorial – 4/26/06

This page was last updated on April 26, 2006.

Hot air; Editorial; Beaver County Times; April 26, 2006.

Below is a detailed critique of the subject editorial.

“If you have Internet access, you’ve no doubt received a chain e-mail that calls for a boycott of the Exxon Mobil oil company as a way of forcing it to lower the price of gasoline. The thinking is that the boycott eventually will force the company to drop prices.

“While this makes for good Internet bloviation, it has absolutely nothing to do with the real world.

“Philadelphia Inquirer business columnist Andrew Cassel pointed out that an economic professor at Ohio State has noted that the law of supply and demand makes this domestic boycott impossible. (The e-mail ignores the impact the energy needs of China and India and unstable international markets are having on prices.)

“To start with, where are you going to buy the gasoline? From other companies, which will take advantage of the increased demand for gasoline and hike prices.

“And where are these companies going to get the extra gas to meet the increased demand? From Exxon Mobil, which will be more than happy to sell its unused gasoline, especially at the higher prices created by the boycott.”

[RWC] So the Times really does understand how markets work.

“If drivers want to bring down the price of gasoline, the only way they can do that, as Cassel notes, is to use less. That means forming car pools, buying fuel-efficient cars, using mass transit, etc.

“Demand-side steps like these will do the job, not some e-mail that’s a combination of hot air and bad economics.”

[RWC] How will this address ever-increasing demand outside the U.S.? Did the editorial author already forget how markets work?

I’m sure you noticed there was no mention of increased supply. If you recall, Times editorials take the position that conservation is our savior and attempts to increase supply would be futile.