Fuel Prices

From: "Graham & Sue Smith" <sage@hfx.eastlink.ca>
To: <sust-mar@chebucto.ns.ca>
Date: Fri, 25 May 2001 12:47:56 -0300
Precedence: bulk
Return-Path: <sust-mar-mml-owner@chebucto.ns.ca>

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There was a piece in the recent Sust-Mar digest that caused me some concern.
It tried to make an economic case for boycotting Esso and Petro-Can, with
the aim of holding down fuel prices.  Notes of this type are making the
rounds these days.  I am disappointed that it found its way into Sust-Mar,
as the argument it makes is fundamentally flawed.

It would appear that conservation is not an option.  The advocated approach
of targeting specific gas stations has been around for a few years (at
least), but doesn't work.  Most of the gas stations are franchises who have
distribution deals with specific fuel producers.  The stations make almost
no money on gas (but they do really well selling cigarettes and junk food).
It is against the law for them to sell gas at less than cost - this is
called predatory pricing.  The most they could lower the price is about 2
cents in rural areas and less than a penny in the cities.

Refineries, on the other hand have great profit margins right now.  They are
all running at almost 100%, and can sell to the highest bidder.  President
Bush ordered American refineries to postpone maintenance shutdowns to ensure
that there was enough fuel oil for the winter.  Those refineries have to
shut down now for regular repairs and upgrades, and this has reduced the
supply in the US, thus increasing the price.

As for supporting only the independent gas stations - it can be really hard
to find them.  Once you exclude the four big ones: Esso (Exxon),
Petro-Can, Shell, and Husky, there isn't much left. Those that do appear
independent still have to get their gas from the same refineries as the
big-name stations.

So what to do?  There doesn't appear to be any great increase in supply
coming soon (refineries just don't have excess capacity), which means that
the only real way to reduce prices is to USE LESS GAS.

There is another more pro-active approach that elected representatives could
take, namely to TRIPLE OIL & GAS PRICES.  Yes, I mean increase prices.  And
put the money into developing environmentally friendly energy sources and
environmental remedial action.

Energy is a bargain at today's prices, and that is why we are ruining our
planet by burning so much fossil fuel.  We need a strong motivation to use
less energy, or turn to cleaner energy, and the only way is through the
pocketbook.  Think for a minute about future Canadians and what we are
leaving them.

Thank you,
Graham Smith


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